Today, I'll be discussing on the reversal pattern.
What is Inverse Head And Shoulders?
An , also called a "head and shoulders bottom", is similar to the standard pattern, but inverted: with the top used to predict reversals in downtrends. This pattern is identified when the price action of a security meets the following characteristics: the price falls to a trough and then rises; the price falls below the former trough and then rises again; finally, the price falls again but not as far as the second trough. Once the final trough is made, the price heads upward, toward the resistance found near the top of the previous troughs.
The entry (buy order) of an pattern should be placed above the neckline resistance (breakout).
3. TARGET (TAKE PROFIT)
The target level of your pattern should be the distance of the head to the neckline resistance. When this pattern is formed in a channel support or rectangular pattern support, your target levels should be the channels resistance and rectangular pattern resistance respectively.
4. SETUP INVALIDATION AND STOP LOSS
The setup invalidation of this setup is a breakdown below the shoulders .
The stop loss can be less than or equal to the setup invalidation.
I'll be using my analysis on IOSTUSDT as a trade example on the reversal pattern.
My entry (buy order) ⬆️ - breakout above the neckline resistance.
My target 🎯 - distance (head - neckline resistance).
Setup invalidation ❌ - breakdown below the shoulders .
Stop loss 🔴 - setup invalidation / 2.
The trade played out as expected, hitting my take profit and it's still pumping.