Inverse Head and Shoulders Pattern

What the Inverse Head and Shoulders pattern means

The pattern shows sellers driving price to a final low at the head, then failing to push it back down on the right shoulder. A close above the neckline that connects the intervening highs shows buyers have taken control and the downtrend is likely finished.

How the Inverse Head and Shoulders is traded

• →Wait for a close above the neckline before entering long.
• →The measured target is roughly the distance from the head to the neckline projected up from the break.
• →Stop goes below the right shoulder, which a valid breakout should not revisit.
• →A breakout backed by rising volume carries more weight.

Common mistakes

• ✕Buying the head or right shoulder before the neckline breaks.
• ✕Forcing the label onto shapes that did not follow a real downtrend.