Inverse head and shoulders
bullish · reversal pattern
The inverse head-and-shoulders is the bullish mirror of the head-and-shoulders top: three troughs (shoulder, head, shoulder) with the central trough deepest. It signals a potential reversal from a prior downtrend. A confirmed close above the neckline — drawn through the two intervening reaction highs — completes the pattern.
Formation rules
- Prior trend is down
- Three troughs with the central trough lowest
- Right shoulder forms on lower volume than the head
- Neckline connects the two intervening highs
- Pattern completes on a close above the neckline
How to trade it
Buy a confirmed close above the neckline; place a stop below the right shoulder. Measured-move target = height of head added to the neckline. As with the bearish version, demand volume confirmation on the breakout — pattern failure is much more common when volume contracts on the breakout candle.
Common pitfalls
- In strong downtrends, the right shoulder may break through and resume the trend
- Volume confirmation is essential
- Avoid trading the pattern in low-liquidity environments where the neckline is noisy
Statistical context
Bulkowski reports inverse H&S as one of the higher-reliability bullish reversals when volume contracts into the right shoulder and expands on breakout. As always, real-world performance varies by market regime.
Related patterns
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