Inverse head and shoulders reversal pattern - IOSTUSDT review 📚
Good day everyone.
Today, I'll be discussing on the inverse head and shoulders reversal pattern.
1. DEFINITION
What is Inverse Head And Shoulders?
An inverse head and shoulders, also called a "head and shoulders bottom", is similar to the standard head and shoulders pattern, but inverted: with the head and shoulders 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.
2. ENTRY
The entry (buy order) of an inverse head and shoulders pattern should be placed above the neckline resistance (breakout).
3. TARGET (TAKE PROFIT)
The target level of your inverse head and shoulders 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 support level.
The stop loss can be less than or equal to the setup invalidation.
TRADE EXAMPLE
I'll be using my analysis on IOSTUSDT as a trade example on the inverse head and shoulders reversal pattern.
My entry (buy order) ⬆️ - breakout above the neckline resistance.
My target 🎯 - distance (head - neckline resistance).
Setup invalidation ❌ - breakdown below the shoulders support level.
Stop loss 🔴 - setup invalidation / 2.
The trade played out as expected, hitting my take profit and it's still pumping.
Today, I'll be discussing on the inverse head and shoulders reversal pattern.
1. DEFINITION
What is Inverse Head And Shoulders?
An inverse head and shoulders, also called a "head and shoulders bottom", is similar to the standard head and shoulders pattern, but inverted: with the head and shoulders 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.
2. ENTRY
The entry (buy order) of an inverse head and shoulders pattern should be placed above the neckline resistance (breakout).
3. TARGET (TAKE PROFIT)
The target level of your inverse head and shoulders 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 support level.
The stop loss can be less than or equal to the setup invalidation.
TRADE EXAMPLE
I'll be using my analysis on IOSTUSDT as a trade example on the inverse head and shoulders reversal pattern.
My entry (buy order) ⬆️ - breakout above the neckline resistance.
My target 🎯 - distance (head - neckline resistance).
Setup invalidation ❌ - breakdown below the shoulders support level.
Stop loss 🔴 - setup invalidation / 2.
The trade played out as expected, hitting my take profit and it's still pumping.
