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An inverse head and shoulders, also called a head and shoulders bottom or a reverse head and shoulders, is inverted with the head and shoulders top used to predict reversals in downtrends.
An inverse head and shoulders is an upside down head and shoulders pattern and consists of a low, which makes up the head, and two higher low peaks that make up the left and right shoulders. The right shoulder on these patterns typically is higher than the left, but many times it’s equal.
To identify the inverse head and shoulders pattern on a trading chart, you need to find three bottoms with the following components – left shoulder, head, and right shoulder. Furthermore, the pattern appears at the end of a downward trend and should have a clear neckline used as a resistance level.
An inverse head and shoulders pattern is a technical analysis pattern that signals a potential trend reversal in a downtrend. This pattern is formed when an asset’s price creates a low (the “left shoulder”), followed by a lower low (the “head”), and then a higher low (the “right shoulder”).
The inverse head and shoulders pattern is a reversal pattern in stock trading. It gets its name from the visual representation it makes on the chart -- two higher lows on either side of a lower peak in price action in the middle. It is also the same as a head and shoulders pattern that flipped on its horizontal axis. Hence the "inverse."
The inverse head-and-shoulders pattern is one of the most accurate technical analysis reversal patterns, with a reliability of 89%. It is also one of the most profitable chart patterns, with an average 45% price increase per trade.
The inverse head and shoulders pattern is a technical indicator that signals a potential reversal from a downward trend to an upward trend. The pattern appears as a head, 2 shoulders, and neckline in an inverted position.
The inverse head and shoulders, or the head and shoulders bottom, is a popular chart pattern used in technical analysis. It represents a bullish signal suggesting a potential reversal of a current downtrend.
An Inverse Head-and-Shoulders is a bullish reversal chart pattern that typically appears at the end of a downtrend. Following this, the price generally goes to the upside and starts a new uptrend. The pattern consists of 3 uneven consecutive swing lows or troughs.
When a Head and Shoulders formation is seen in a downtrend, it signifies a major reversal. Just like in the straight Head and Shoulders pattern, the strength of this reversal, measured as the rise amount after breakout, is proportional to the decline before pattern emergence: stronger preceding trends are prone to more dramatic reversals.