The Inverted Head and Shoulder Chart Pattern occurs during a downtrend and marks its end. This is a bearish reversal pattern. It usually occurs after an extended move higher and represents exhaustion from buyers.
With this you should understand that reversal is going to come in the market. Now is the time to create a new position in the market.
Next we will know when to enter this new position, where to put the stop loss and what should be the target.
Inverted Head and Shoulder Chart Pattern
After the downtrend, you will see an inverted head and shoulders pattern. For this identification, you will see two shoulders and a head in it.
The head will always appear below both the shoulders. Both the shoulders i.e. left shoulder and right shoulder can be equal or above or below each other. But always above the head.
Next we will know how to take a position in the market with the help of this.
Trade Setup – Inverted Head and Shoulder Pattern
As soon as you find a breakout of the neckline in the inverted head and shoulders pattern, you should be ready to take a position in the market.
You can make your position in the next candle from the candle giving breakout of the neckline.
You can place your stop loss below the low of the candle giving the breakout of the neckline. Now you have also taken a position in the market and placed your stop loss.
Now let’s talk about what the target should be. For the target, you have to draw a vertical line from the head to the neckline. You have to draw a line of the same height above the neckline. this will be your target.
Example 1 – Inverted Head and Shoulder Pattern
In these charts, you have been told about the inverted head and shoulders pattern. In this we have also shown you the inverted head and shoulders pattern by marking.
Example 2 – Inverted Head and Shoulder Pattern
- Head and Shoulder Chart Pattern
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