Inverse Head and ShouldersTargets 1 listed above. Targets 2 also listed in smaller type and are longer term targets. There is a wide rising wedge that may be narrowing but it is not a super narrow convergence of the 2 trendlines. Just something to keep an eye on for now. Negative volume does appear to be picking up. Price is inside the bands set on an 80 DMA. CRM is not oversold or overbought at this time of RSI set on 80 and 30. CRM traded in a shark pattern at the bottom and pulled to the .886 fib level which has helped it break the neckline.
The Head and Shoulders Bottom, sometimes referred to as an Inverse Head and Shoulders, is a reversal pattern that shares many common characteristics with the Head and Shoulders Top, but relies more heavily on volume patterns for confirmation.
As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, with its completion marking a change in trend. The pattern contains three successive troughs with the middle trough (head) being the deepest and the two outside troughs (shoulders) being shallower. Ideally, the two shoulders would be equal in height and width. However, the market is not ideal and the RS and LS are rarely exactly the same price. The reaction highs in the middle of the pattern can be connected to form resistance, or a neckline.
The price action that forms the Head and Shoulders Bottom is roughly the same as that which forms the Head and Shoulders Top, but reversed. The role of volume marks the biggest difference between the two. Generally speaking, volume plays a larger role in bottom formations than top formations. While an increase in volume on the neckline breakout for a Head and Shoulders Top is welcomed, it is absolutely required for a bottom. There is a large volume bar marked by yellow star that marks the 2nd break of the neckline after a throwback occurred. The neckline is resistance until broken and then can become support.
This is a reversal pattern so there has to be a preceding downtrend to reverse. While in a downtrend, the left shoulder forms a trough that marks a new reaction low in the current trend. After forming this trough, an advance ensues to complete the formation of the left shoulder. The high of the decline usually remains below any longer trend line, thus keeping the downtrend intact. From the high of the left shoulder, a decline begins that exceeds the previous low and forms the low point of the head. After making a bottom, the high of the subsequent advance forms the second point of the neckline. The decline from the high of the head (neckline) begins to form the right shoulder. This low is always higher than the head, and should be in the vicinity of the the left shoulder. It is considered more bullish if the right shoulder (RS) is higher than the left shoulder (LS). The neckline forms by connecting reaction highs, or the peaks which represent resistance. Depending on the relationship between the two reaction highs, the neckline can slope up, slope down, or be horizontal. The slope of the neckline will affect the pattern's degree of bullishness: an upward slope is more bullish than a downward slope.
The neckline must be broken with an uptrend in place. An expansion of volume is necessary upon break out. Targets are calculated using the length from the head to the neckline and projected up from the neckline. Any pattern can fail and throwbacks below neckline after a break out do happen. This pattern does well in a bull market and not so great in a bear market.
No recommendation. The green triangles are pocket pivots.
