The Head and Shoulders is bearish reversal pattern consisting of a higher swing high with lower swing highs on either side. Measuring the distance in pips from the top of the pattern to the neckline give a conservative profit projection. As with all most patterns, they give Forex traders valuable clues in determining future price direction and act as road signs along the trend highway. There are rules that must be observed when this pattern is recognized. Knowing where to enter, where to exit for profit and knowing where to exit if this pattern fails are the three things that traders need to get from this pattern. It consists of an initial price surge upward followed by a sharp pullback forming the first shoulder.