Neckline

A key support or resistance level in head-and-shoulders and inverse head-and-shoulders chart patterns, drawn by connecting the troughs (or peaks) that form between the pattern's shoulders and head. A decisive break below the neckline in a head-and-shoulders top confirms the bearish reversal, while a break above the neckline in an inverse pattern signals a bullish reversal. Technical traders often measure the distance from the head to the neckline and project it downward (or upward) to estimate the price target.