A reverse, or Inverted
Head and Shoulders Pattern (often shortened to
is a bullish
stock market technical
analysis charts reversal pattern that is found
bottoms. A triple bottom is a variation of this.
chart patterns recognition
variation of the Head and Shoulders pattern, the inverse Head and Shoulders
one of the most reliable stock chart patterns found in technical
but again it is important that volume
patterns confirm its
validity. There are some occasions when an Inverted Head and Shoulders
can be found as
of a continuation phase, but in these cases the pattern has usually not
been confirmed by volume.
inverted left hand shoulder is created
by a consolidation following a move produced with good volume levels.
Volume should decrease on the consolidation before sellers push the
market to new lows but with lower volume than the LH shoulder. This
creates the head as prices rise back to near the previous
consolidation level high.
right hand shoulder is then
formed on low volume when sellerss re-enter but fail to gain
producing a higher low and the markets then rise again on higher
volume. The neckline should be broken on high volume to confirm the
Reverse Head and Shoulders Pattern -
Stock Chart Patterns
normal market will usually drop back to backtest the validity of
the break up through the neckline of the Inverted Head and Shoulders. This move in prices should be on
much lower volume
but on rare occasions, it may not do a backtest if the markets momentum
LH Shoulder - high volume
RH Shoulder - low volume
Neckline - must
be broken on high volume
Inverted Head and
valid IH&S pattern produces a measured move so
find a price target by calculating the vertical height of the Head, and
then measuring an equal distance above the neckline.
A reverse head and
shoulders pattern fails and is not valid if prices
break back below the
level of the RH Shoulder before hitting its price target. Stop
losses can be placed just below this low.
Example of an Inverted Head and Shoulders
and Shoulders Pattern
The bearish equivalent of an inverse H&S is the Head and Shoulders
(often shortened to H&S), it is a
bearish stock chart technical analysis reversal pattern that is found