A trend line or neckline is drawn connecting the "Head and Shoulders" pattern to determine the potential trade opportunities and targets. The neckline can be also formed in an angle (slanted).
Trade: Connect "Head and Shoulders" bottoms in a trend line or neckline. When the price closes below the neckline, a potential short trade is signaled. Short one tick below the breakdown bar's low.
Target: Compute the vertical distance between the "apex" of the "Head and Shoulders" pattern and the neckline. The target is set below this distance from the neckline.
Stop: After a trade entry, if the price closes above the neckline, a potential failure of the pattern is signaled. Place a "stop" order above the neckline.