- Upsurge's Newsletter
- Posts
- Inverse Head and Shoulder | Bullish Chart Pattern
Inverse Head and Shoulder | Bullish Chart Pattern
Understanding the Inverse Head and Shoulder pattern →
Hey there!
Bringing to you a chart pattern suggesting a short-term trend reversal:
➡️ Inverse head and shoulder is a short-term trend-reversal chart pattern characterized by 3 troughs: the first and third troughs are roughly equal in depth and are known as "shoulders", while the second trough is deeper and is called the "head".
➡️ Structure of Inverse Head and Shoulder :
Left Shoulder: After a downtrend, the price of the stock makes a low and then rallies to a higher point, forming the left shoulder.
Head: Following the formation of the left shoulder, the price declines to a point lower than the left shoulder and then rallies again, forming the head.
Right Shoulder: Finally, the price declines again but not as low as the head, and then rallies one more time, forming the right shoulder.
Neckline: A trendline is drawn connecting the high points (or "peaks") after the formation of each shoulder and the head.
➡️ The trader could enter a long position when the price breaks above the neckline, preferably on high volume, or when the price returns to retest the neckline.
➡️ In order to manage risks, the trader should place a stop loss slightly below the right shoulder or the neckline to minimize potential losses.
➡️ Note: It is important that inverse head and shoulder should be formed in a downtrend as for reversal to occur, there must be something to reverse.
🪔 Get a 20% discount across courses & subscriptions
Under Upsurge’s Diwali Mega Sale, get any course or subscription plan at a 20% discount. Note that the sale is valid only until 11th November, so HURRY UP ⏰
None of the above stock ideas are intended as recommendations. Please consult a registered advisor before buying/selling.
✍🏼 If you have any questions or just want to say hi, feel free to write to us at [email protected]
Reply