Inverse Head-and-Shoulders Forex Pattern

The Inverse Head-and-Shoulders formation is a mirror image of the Head-and-Shoulders Forex Pattern.  Therefore, you can apply the same characteristics, potential problems, signals, and trader's point of view from the preceding presentation.

The underlying currency broke out of the downtrend ranged by the xx'-yy' channel. The currency retested the previous resistance line (the rally number 3), now turned into a support line. Among the three consecutive rallies, the shoulders (1 and 3) have approximately the same height, and the head is the lowest. Prior to point A, the neckline was a support line. Once this line was broken, it turned into a significant resistance line. The price bounced off the neckline twice, at points В and C.

The neckline was eventually broken at point D, under heavy volume. As the significant resistance line was broken, a retracement could be expected to retest the neckline (E), now a support line again. If it held, the price was expected to eventually rise to around level F, which is the price target of the head-and-shoulders formation.

The price objective is approximately equal in amplitude to the distance between the top of the head and the neckline, and is measured from the breakout point D.

Common Gap Forex Pattern

Breakaway Gap Forex Pattern

Wedge Forex Pattern

Descending Triangle Forex Pattern

Ascending Triangle Forex Pattern

Flag Forex Pattern

Symmetric Triangle Forex Pattern

Pennant Forex Pattern

Head-and-Shoulders Forex Pattern

Inverse Head-and-Shoulders Forex Pattern

Double Bottom Forex Pattern

Double Top Forex Pattern

Triple bottom Forex Pattern

Diamond Forex Pattern

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