Inverse Head & Shoulder Tutorial An inverse head and shoulders pattern is the opposite of the head and shoulders pattern and signals a potential bullish reversal from a downtrend to an uptrend. Here's a breakdown of its key components:
Left Shoulder: The price falls to a trough and then rises back to a resistance level.
Head: The price falls again to a lower trough and then rises back to the same resistance level.
Right Shoulder: The price falls again but only to the level of the first trough, then rises once more.
The pattern gets its name because it resembles an upside-down head with shoulders on either side. The neckline is the resistance level connecting the highest points of each peak.
Types of Inverse Head and Shoulders Patterns
Inverse Head and Shoulders Bottom: This pattern signals a potential reversal from a bearish trend to a bullish trend.
How to Trade It
Breakout Confirmation: The pattern is confirmed when the price breaks above the neckline in an inverse head and shoulders bottom.
Entry Point: Traders often enter a long position when the neckline is broken in an inverse head and shoulders bottom.
