Forex Chart Formation Patterns_3. Learn Forex Inverse Head and Shoulders Pattern

Lesson 3:Learn Forex Inverse Head and Shoulders
Pattern

A bullish reversal pattern that is formed when there is a strong downward trend is
known as the inverse head and shoulders. It is the exact opposite of the bearish
head and shoulders pattern. It appears after a strong move down and consists of a
low as the left shoulder, a lower low as the head, and a higher low as the right
shoulder - and a neckline which has been drawn connecting the highs between two
shoulders.

This pattern can produce three different necklines. First is a downward sloping
neckline. This is the weakest reversal signal as often, the price will just continue to
trade lower instead of reversing.

The second is a horizontal neckline which provides the most objective entry and
target price. The third neckline is upward-sloping. This one has the highest
probability of successful reversal as the price was already high before.

Remember, the most important thing about formation patterns is waiting for the break
of the neckline. Then, and only then can the pattern be considered complete. You
should measure the formation height from the breakout point to set a price target for
this formation.