Chart pattern
Inverse Head and Shoulders explained
An inverse head and shoulders is the mirror image of the classic pattern. It forms after a downtrend with three troughs, the middle one lowest, and suggests selling pressure may be easing.
How to spot it
- Confirm a prior downtrend.
- Mark the left shoulder: a low followed by a bounce.
- Mark the head: a lower low followed by a bounce to a similar high.
- Mark the right shoulder: a higher low, often near the left shoulder's depth.
- Draw the neckline across the two bounce highs and watch for a close above it.
What invalidates it
The pattern is invalidated if price falls below the head, or if a break above the neckline fails and price closes back below it.
Common mistakes
- Entering before a close above the neckline
- Ignoring volume, which often rises on the breakout
- Using it in a sideways market with no downtrend to reverse
- Placing a stop inside the noise of the right shoulder
Questions
- How is it different from a double bottom?
- A double bottom has two lows at similar levels. An inverse head and shoulders has three, with the middle one deepest.
- Do the shoulders have to be symmetrical?
- No. They are rarely identical. What matters is the structure: a lower low in the middle and a higher low on the right.
- What confirms the pattern?
- A close above the neckline, ideally with stronger volume and a successful retest, but none of this guarantees follow-through.
Related patterns
See how patterns are applied to a specific instrument in the market guides.
Educational content, not financial advice. Chart patterns describe what price has done and do not predict what it will do next.
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