Inverse Head & Shoulder_Breakout_Retest_Ready to FlyThe "inverse head and shoulders" is a chart pattern used in technical analysis to predict potential bullish reversals in the price of a security or asset. It is the opposite of the more common "head and shoulders" pattern, which indicates a potential bearish reversal.
Here's a breakdown of the components of the inverse head and shoulders pattern:
#Left Shoulder:
The pattern begins with a downtrend in the price of the asset. The left shoulder is formed when the price temporarily rises before resuming its downward movement.
#Head:
Following the left shoulder, there is a further decline in price, forming a lower low. The head is created when the price starts to rise again, but this time it reaches a lower high compared to the left shoulder.
#Right Shoulder:
After the formation of the head, there is another decline in price, forming a higher low compared to the low of the head. The right shoulder is created when the price starts rising again.
#Neckline:
The neckline is a trendline drawn across the highs of the left shoulder, head, and right shoulder. It serves as a crucial level of resistance. A breakout above this neckline is a key signal for a potential bullish reversal.
#Volume:
Volume analysis is important in confirming the validity of the pattern. Ideally, there should be higher trading volume during the formation of the head and the breakout above the neckline. This suggests increased buying interest.
#Confirmation:
The pattern is considered confirmed when the price breaks above the neckline. Traders often look for a convincing close above the neckline to confirm the reversal.
