Inverse Head and Shoulders Pattern

The inverse head and shoulders pattern is a technical analysis tool used to signal a potential trend reversal from a downtrend to an uptrend.

The inverse head and shoulders pattern is characterized by three consecutive troughs, with the middle trough (head) being the lowest and the two outer troughs (shoulders) being higher and nearly equal. This formation indicates that the downtrend is nearing its end, and a reversal to an uptrend may occur soon. Identifying this pattern can provide traders with a valuable signal to enter a new long position or exit a bearish trade, making it an essential part of technical analysis.

The inverse head and shoulders pattern is the opposite of the head and shoulders pattern. Technical traders widely follow both formations due to their distinct shapes and clear signals as trend reversal patterns.