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Inverse Head and Shoulders

How to Head and ShouldersGreetings, Financial Enthusiasts! 🌟 If you appreciate our charts, give us a quick 💜💜 The Head and Shoulders pattern is a well-known chart formation in technical analysis. It indicates a reversal from a bullish to a bearish trend, usually at the end of an upward trend. Key Points: - Head and Shoulders: Chart pattern signaling trend reversal. - Formation: Three peaks on a baseline - two lower outer peaks and a higher middle peak. - Bullish to Bearish: Suggests a shift from an upward trend to a downward one. - Applicability: Seen on all timeframes, suitable for various traders and investors. - Entry Levels: Easily identifiable, aiding in trade implementation. Why It Matters: The Head and Shoulders pattern provides traders with a visual representation of a trend reversal. It's widely used due to its simplicity and applicability across different timeframes. The Pattern: - Formation (Market Tops): 1. Left Shoulder: Price rises, forms a peak, then falls. 2. Head: Price rises again, forming a higher peak. 3. Right Shoulder: Price falls again, then rises but forms a lower peak than the head. - Formation (Market Bottoms): 1. Left Shoulder: Price falls, forms a trough, then rises. 2. Head: Price falls again, forming a lower trough. 3. Right Shoulder: Price rises again, then falls, forming a higher trough than the head. Neckline: - For Market Tops: Connect the low after the left shoulder to the low following the head to create the neckline. - For Market Bottoms: Connect the high after the left shoulder to the high after the head to form the neckline. Trading the Pattern: - Wait for the pattern to complete before trading. - Entry when price breaks below the neckline (tops) or above it (bottoms). - Stops placed above the right shoulder (tops) or below it (bottoms). - Profit targets calculated based on the head-to-shoulder difference and added (bottoms) or subtracted (tops) from the breakout level. Why It Works: - Sellers enter as price falls from its peak, reducing aggressive buying. - The neckline marks a point where traders exit positions, driving price toward the target. - A lower right shoulder (tops) or higher right shoulder (bottoms) signals a trend shift. - Profit target assumes forced exits by those in losing positions. - The neckline prompts many traders to exit, pushing price towards the target. - Volume analysis helps confirm patterns; expanding volume (bottoms) shows increased buying interest. Pitfalls: - Waiting for pattern completion may require patience. - Not all patterns lead to successful trades. - Profit targets aren't always reached. - External events can disrupt patterns. - Patterns can be subjective; traders should define their criteria. The Head and Shoulders pattern, though not foolproof, provides a structured approach to identify and act on trend reversals.
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Education
by Vestinda
21
📈 4 BULLISH PATTERNS YOU NEED TO KNOW📌How to easily identify these patterns? 🟢Cup and Handle Pattern The cup and handle pattern is a bullish continuation pattern that typically occurs after a significant uptrend. It is characterized by a U-shaped "cup" followed by a smaller consolidation known as the "handle." The cup portion represents a temporary pause or correction in the price, forming a rounded bottom. This signifies that selling pressure has diminished, and buyers are stepping in. After the cup formation, the handle is formed as a slight downward drift in price, usually in the form of a small consolidation or a shallow retracement. The handle represents a final consolidation before the resumption of the bullish move. The handle should be relatively smaller in size and have a downward-sloping price action. 🟢Double Bottom The double bottom pattern is a bullish reversal pattern that signifies a potential trend reversal from bearish to bullish. It consists of two consecutive lows that are approximately at the same level, forming a support level. The first low represents a selling climax or a period of intense selling pressure. After the first low, the price rebounds and retraces to form a temporary high, creating a potential resistance level. However, buyers step in again, pushing the price back up, resulting in a second low that matches or is very close to the level of the first low. This double bottom formation indicates a significant level of support where buying interest outweighs selling pressure. 🟢 Bullish Flag The bullish flag pattern is a continuation pattern that occurs after a strong upward move in price. It is characterized by a brief period of consolidation, where the price forms a narrow and rectangular range, resembling a flagpole and a flag. The flag portion of the pattern is typically slanted in the opposite direction of the initial price move. The flagpole represents the initial strong upward move, indicating a surge in buying interest. Following the flagpole, the price enters a consolidation phase, represented by the flag. This consolidation allows the price to stabilize and absorb selling pressure. The flag pattern should have parallel trendlines that contain the price action. 🟢Inverse Head and Shoulders The inverse head and shoulders pattern is a bullish reversal pattern that indicates a potential shift from a bearish to a bullish trend. It consists of three consecutive lows, with the middle low (the head) being lower than the two outer lows (the shoulders). The pattern resembles a head between two shoulders. The left shoulder forms as the price declines, followed by a subsequent rally to create a temporary high. The price then retraces, forming the head, which is lower than both the left and right shoulders. After the head, the price rallies again to form the right shoulder, which is usually slightly higher than the left shoulder. 👤 @QuantVue 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
4
General Pattern Failure Explained on BitcoinWhat is General Pattern Failure? General Pattern Failure occurs when a chart pattern breaks out, fails to hit target, quickly reverses then rejects off that same breakout level back inside the pattern continuing in the opposite direction of the breakout. Pictured above in the original chart is a normal breakout on a Inverse Head And Shoulders Pattern while the lower very right examples show General Pattern Failure on the same pattern. Note how the first example has a Bullish Retest (A) where price actually increases at the breakout while the second example is coming back inside that area and finding resistance back inside of the pattern, (Bearish Retest, (B) this then leads to price falling back inside with strong volume/momentum. General pattern failure can also be considered a Liquidity Grab or can be referred to as a “Fake Out”. ----------------------------------------------------------------------------------------- Other Examples: The below image shows General Pattern Failure occuring in the opposite direction on #Bitcoin at $11000 on a Head & Shoulders Pattern. The below image shows General Pattern Failure occuring on BNB Binance Coin (Great Example, Click the image to see the trade play out) ----------------------------------------------------------------------------------------- Final Thoughts: So by using the above methodology we have a potential clue here for Bitcoins next movement, I am watching the 49-50k area to see if we continue to fall or see a short term push (if we get back above the Inverse Head & Shoulders Pattern, $53000 is the next area of interest). Learning to trade patterns such as these can provide great opportunities if you understand price action and how to identify the key areas of the pattern that other traders and investors may be focusing on too, these areas become important psychological levels on the chart that allow us to map out potential trades.
COINBASE:BTCUSDEducation
by Worth_The_Ri5k
What is Inverse Head and Shoulders Pattern?Inverse Head and shoulders Pattern is the mirror image of head and shoulders pattern. Read about Head and Shoulder Pattern here: Inverse H&S Pattern is bullish reversal pattern. Signals the traders to enter into long position above the neckline. Volume play a major role in both H&S and Inverse H&S Patterns. Usually the spike in volume on breakout is considered as a great signal for bullish entry. Again a suitable target can be obtained by measuring the distance between head and neckline of the pattern and using same distance to project the target . After the neckline breakout there is also a probability that prices can be retrace again to neckline due to lack of demand . Prices can only rise if again there is more demand which will lead to bullish uptrend. Also if the neckline slopes slightly upward that is the sign of greater market strength thus gives further conformation to go bullish on Inverse H&S Patter . Let us know what do you think about Inverse H&S Pattern? Please comment your views/doubts! As always nothing works every time in markets. Please do your research before taking any position. This is only for Educational Purpose. We are covering all Major Reversal and continuation patterns in this series. Follow to get updated with all the informative and educational trading ideas. Next Pattern we will cover: Round Bottom Pattern PS: We are publishing this again for global audience.
COINBASE:BTCUSDEducation
by Coinlog
📚HOW TO EFFECTIVELY USE THE HEAD & SHOULDER PATTERN 📚Right here is the dynamic head and shoulder pattern and the steps to trade them when you spot them on the chart. For Head and shoulder pattern to effectively work, we need the left shoulder and the head to complete first. Then we will wait for price to fall back to the support horizontal line. Then if price doesn't break the support level downward, you enter a buy order and set your take profit where the right shoulder will form. Also, if price does not break the resistance at the right shoulder, then we now have our H & S pattern. We then sell again and take profit at the support. Then if a downward breakout occur at the support, we wait for a retest back to the support zone to turn resistance. Then we sell again through the long tail. THE SAME GOES FOR THE INVERSE H & S PATTERN. What do you think? Share your opinion in the comment section✍️ Please support this idea with a LIKE👍 if you find it useful🥳 Follow me to receive more updates on this pair🤙 Comment any coin you need my analysis or forecast on📈📉 Happy Trading💰🥳🤗 Thank you for your support!💓
Education
by PetrockFxTrading
2
Correct Way To Spot An Inverse Head And Shoulders PatternHi everyone, Thanks for reading my idea. This, in MY opinion, is how we should consider if an inverse head and shoulders is valid or not. What is an Inverse Head and Shoulders? It is a downward trend reversal indicator that consists of a left shoulder, a head, and a right shoulder but inverted. I guest most of us already know how we draw the pattern. But I would like to emphasize the word REVERSAL . This is the keyword that most traders forget, including me. How to know if it's valid or not? As shown in the chart, you may already know what's valid or not. But just to put it into words, a valid inverse head and shoulders must be coming from a down trend. As you can see on the Bitcoin chart on the left side, we can not say that it is an inverse head and shoulders IF the price action plays out like that. I'm not saying that the price action will not happen. It can but the pattern is invalid. We can see that on the right side of the chart is the valid and correct way to spot an inverse head and shoulders . It must come from a downtrend, then form the pattern, and finally reverse to the upside. I, myself, had made this mistake from the past. You can see it on my previous ideas but I would like to share it with you for you to not make this mistake. I hope you learned something and let me know if you disagree. I'd be happy to learn more as well. Cheers, Juvs
BITSTAMP:BTCUSDEducation
by Juvssss
8
Impressive reversal pattern on the daily with the dollar.Inverted H&S Break Even Failure Rate 11% Average Rise: 45% Throwback Rate 65% Percentage of Price meeting price target 71% Trend: Downward leading to pattern Price: Must have something to reverse, so if the decline leading to the pattern is small, expect a small rise. Volume: Highest on left shoulder or head “A short-term drop (0-3 months) leading to the pattern results in the best postbreakout performance. “ "A higher left shoulder valley when compared to the right shoulder valley results in worse post breakout performance." - so one could assume the inverse is true? a lower left would result in Better breakout performance?? Breaking right to R3, and not passing on first go is not unusual. With a potential bottoming pattern - right now I'd say the trend for the dollar is to hard to call frankly any trade on. I'm leaning bullish on the dollar, which sounds insane, and does not bode well for commodities - but this pattern on the daily is indicative of a reversal in the dollar. The dollar folks may be getting higher here despite "brrr". Keep in mind how poor the velocity of M2 supply is right now. And keep in mind the Fed giving guidance that rates will be low for years is hinged to their confidence that essentially inflation is really not coming, certainly not hyper inflation or anything high. Very interesting to see if the dollar has found a bottom here. Not advising any trade right now.
TVC:DXYEducation
by ZenMode
7
Inverse Head and Shoulder Pattern using BTCUSDThe head and shoulders chart pattern is a price reversal pattern that helps traders identify when a reversal may be underway after a trend is exhausted. It is of two types: Head & Shoulder and Inverse Head & Shoulder. This reversal could signal an end of an uptrend or downtrend. (Inverse Head & Shoulder with an end to downtrend in this case) Inverse Head & Shoulder: An inverse head & shoulder pattern is comprised of three main components: -After a long bearish trend, the price falls to a trough and subsequently rises to a peak -The price again falls to form a second trough substantially below the initial low and rises again to the same peak -The price falls for the third time but to the level of the first trough only before rising back to the same peak again In this chart pattern there are three trough in which a large trough (the head i.e. the second trough) has a slightly smaller trough on either side of it (right and left shoulder that are the first and third peak), with all of the trough increasing to a same level of resistance i.e. the peak until where all the troughs had risen, called as neckline in the pattern. Once the third trough (right shoulder) moves back to neckline it is likely to breakout to a bullish uptrend indicating a trend reversal hereby, which is the basic explanation of Head and Shoulder. Traders can use Inverse head and shoulder to buy when the breakout is observed i.e. at the neckline after the right shoulder reached there completing the Inverse Head & Shoulder formation. For confirmation traders can use the drop in volume as the Inverse Head & Shoulder is forming and a sudden increase in the volume as breakout is observed suggesting a shift from sellers before the pattern to buyers after the pattern. There are few limitations as well to the Head & Shoulder Pattern: -Sometimes false breakouts might be observed -The time duration for formation of the pattern might be too long -Trough or peak might be pretty far from the neckline resulting in large stop loss distances which might have o reviewed consistently -The price may see pullback after the third peak or trough often confusing few traders ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
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COINBASE:BTCUSDEducation
by Mudrex
12
Inverse Head and Shoulders the accurate chart patternInverse Head & Shoulder Pattern Tutorial - Invesre Head & Shoulders pattern is similar to Head & Shoulders pattern but reversed. The inverse Head & Shoulders is observable in a downtrend and indicates a reversal of a downtrend. The formation of a Inverse Head & Shoulders pattern resembles a baseline or neckline with three bottom where the middle bottom is the lowest price between between the two left and risght bottom. Both the H&S and Inverse H&S patterns are most accurate price action pattern. Also Checkout previous post about Head & Shoulders pattern for better understanding () Stay Tuned, 👍;
TVC:SPXEducation
by tapasdhanadana
inverse HEAD AND SHOULDERS tradedWith this formation, we would enter a long position at the retest of the neckline after it has been broken. Our Stop Loss is going to be below the right shoulder at calculate percentage or 1.8 times ATR. Our target is calculated by measuring the distance of the lower close of the head to the neckline. 80% of that distance between the head and the neckline is approximately the distance that the we will target after it breaks the neckline. Remember always to wait for confirmations candles around the key levels.
COINBASE:BTCUSDEducation
by Ma_Rk_
Fundamentals of the Head and Shoulder BottomMany of the educational posts out there are mere examples of past chart patterns that have already completed themselves. Which this is an excellent way to study data and to help predict future movements, it tends to create over-confident traders. As many of us know that there is no 100% guarantee to any chart pattern. However many people, myself included, sometimes become too stuck on one pattern and its outcome, and to not fully recognize the fact that it can fail. Leading to why I decided to make this educational post, whether this pattern completes itself or not, it is here to show you what trading is actually like. The chart above displays a textbook Head and Shoulders Bottom (also called Inverse Head and Shoulders) pattern forming. However, this pattern has yet to fully complete itself, and even if it does, it may or may not hit our preferred target. But lets break down the fundamentals of a Head and Shoulders Bottom. Prior Trend : The reason it is called a head and shoulders bottom pattern, is because it occurs after a previous downtrend. So we first must check that the trend is down before considering this pattern. The Body : The reason it is called a head and shoulders pattern is due to its shape. The head is ALWAYS the lowest point in this pattern, while the left and right shoulders sit at similar levels above the head. All three of these points then share the same resistance level know as the neckline. Neckline : The neckline forms by connecting the highs following the left shoulder and the head of the pattern. This line can slope up, slope down, or be horizontal. This is the key level to break in this pattern. Right Shoulder : There seems to lots of controversy with the right shoulder, some believe that this level must at the exact same or higher level than the left shoulder. However this is not the case. While symmetry is preferred, sometimes the shoulders can be out of whack, and the right shoulder will be higher, lower, wider, or narrower. Volume : Since this pattern forms on the bottom of bear trends, there should be heavy selling volume on the left and right shoulders, while the right shoulder should be accompanied by light selling pressure. The most important moment for volume occurs on the advance from the low of the right shoulder. For a breakout to be considered valid, there needs to be an expansion of volume on the advance and during the breakout. Neckline Break : In order for this pattern to complete itself. There MUST be a break above the neckline . Otherwise the neckline remains resistance the the trend continues downwards. Confirmation : Some believe the the neckline break serves as confirmation. However the real confirmation is once the neckline which once acted as resistance, later acts as support. Target : The preferred target may be measured by taking the distance from the bottom of the head up to the neckline. While this is just a preferred target, one must consider other possible resistance levels. Remember, even with all the patterns out there, there is never a 100% guarantee in trading. I wish you all the best of luck! I Hope you all found this educational post intresting and maybe even a little helpful! DISCLAIMER: Please note I am only providing my own trading information for your benefit and insight to my trading techniques, you should do your own due diligence and not take this information as a trade signal.
BITFINEX:BTCUSDEducation
by oh92
9