Inverse Head and Shoulders Chart Pattern


Naviamarkets1056

Uploaded on Mar 5, 2025

The Inverse Head and Shoulders is a bullish reversal chart pattern that signals a potential trend change from bearish to bullish. It consists of three troughs: a lower head between two higher shoulders, with a neckline acting as resistance. A breakout above the neckline confirms the trend reversal, indicating a potential price increase. Traders use this pattern to identify buying opportunities with stop-loss levels set below the right shoulder.

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Inverse Head and Shoulders Chart Pattern

Inverse Head and Shoulders Chart Pattern For More Information Visit - https://navia.co.in/blog/inverse-head-and-shoulders-chart- pattern/ The Inverse Head and Shoulders pattern is a chart formation characterized by a baseline and three distinct troughs: a deeper central trough, known as the "head," flanked by two shallower troughs, referreod to vas thee "shrouldvers." Typically emerging after a downtrend, this patterni seignalws a potential bullish reversal. It indicates that selling momentum is weakening while buying interest is gaining strength, often foreshadowing the beginning of a new upward For More Information Visit - https://navia.co.in/blog/inverse-head-and-shoutldreres-cnhadrt-. pattern/ 01 Structure of the Inverse Head and Shoulders Pattern • Left Shoulder: The price declines to a trough and then rises to form a peak. • Head: The price declines again, this time forming a lower trough (the Head), and then rises. • Right Shoulder: The price declines once more, but this time the trough is higher than the Head, indicating weakening selling pressure. • Neckline: A trendline drawn connecting the peaks formed between the Head and the Shoulders. The neckline acts as a For More Information Visit - https://navia.co.in/blog/inverse-head-and-shoulders-chart- pattern/ resistance level in an Inverse Head and Shoulders pattern. Math Behind the Inverse Head and Shoulders Pattern • Left Shoulder: The initial trough (Left Shoulder) forms when selling pressure drives the price down, but then buying pressure causes a temporary rise. • Head: The price declines further to form a lower trough (the Head). However, the subsequent rise is more pronounced, reflecting a shift in market sentiment from bearish to bullish. • Right Shoulder: The final decline forms a higher trough (the Right Shoulder), indicating that selling pressure is weakening and buying pressure is gaining strength. • Neckline: The neckline is the key resistance For More Information Visit - https://navia.co.in/blog/inverse-head-and-shoulders-chart- pattern/ level. When the price breaks above the neckline, it confirms the pattern and signals a potential upward move. Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are for illustrative purposes and are not intended as recommendations. Brokerage will not exceed the SEBI prescribed limit. Navia Markets Ltd ,SEBI Registration No.INZ000095034-NSE Member code for CM, FAO & CD: 07708 - BSE Clearing No. for CM, FAO & CD: 6341-MCX Member ID: 45345 NSDL DP ID: IN300378-CDSL DP ID: 12086500-SEBI Registration No. for DP: IN-DP-311-2017-GST Registration number :33AAACM4739R2ZZ-Registered office: Ganga Griha, 4th & 5th Floor, No.9, Nungambakkam High Road, Chennai - 600 034 Email ID: [email protected] - Contact No: +91 70100 75500 https://bit.ly/naviadisclaimer