🔻 Inverse Head and Shoulders Pattern – Bullish Reversal Signal

The Inverse Head and Shoulders pattern is a classic reversal formation that appears after a downtrend. It signals that sellers are losing momentum and a bullish reversal may occur. It is the opposite of the traditional Head and Shoulders pattern.

📘 What Is the Inverse Head and Shoulders Pattern?

The Inverse Head and Shoulders pattern consists of three troughs:

• Left Shoulder: First low after a downtrend followed by a small rebound.
• Head: Lower low forming the bottom of the trend.
• Right Shoulder: Third low, roughly equal to the left shoulder, signaling weakening bearish momentum.
• Neckline: Resistance line connecting the highs of the rebounds; a break confirms reversal.
  
  
  

💡 Market Psychology

- Left Shoulder: Sellers push prices lower, but buying pressure appears. - Head: Sellers push to a new low, but buyers defend the level strongly. - Right Shoulder: Selling pressure weakens, indicating buyers may take control. - Neckline break: Confirms a bullish reversal.

✅ Pro Tip: Volume usually increases on the breakout above the neckline, confirming the bullish reversal.

⚙️ How to Trade Inverse Head and Shoulders

1. Identify the left shoulder, head, and right shoulder after a downtrend.
2. Draw the neckline connecting the highs of the rebounds.
3. Enter a buy (long) position after price closes above the neckline.
4. Place a stop-loss below the right shoulder’s low.
5. Set a target equal to the height from the head to the neckline projected upward.
   
   
   

🏁 Conclusion

The Inverse Head and Shoulders pattern is a reliable indicator of bullish reversal. Recognizing it early and combining it with volume and resistance/support levels can give traders a strong edge in spotting trend reversals.

“When the Inverse Head and Shoulders forms — the bears fade, and the bulls take charge.”