Inverse Head and Shoulders
A three-trough reversal pattern at a downtrend bottom: the middle trough is deepest, flanked by two shallower troughs, signalling a trend floor.
The Inverse Head and Shoulders is the bullish mirror of the classic pattern. Price falls to a low (left shoulder), bounces, drops to a deeper low (head), bounces again, then falls to a shallower low (right shoulder) before breaking out.
Confirmation arrives on a close above the neckline. The measured target equals head-to-neckline distance projected upward from the breakout point. Volume on the right-shoulder bounce and the breakout bar should expand.
Example
SPY forms troughs at $420 (left shoulder), $410 (head), $417 (right shoulder) with a neckline at $427. A daily close above $427 triggers the pattern with a target near $444.
Related Terms
Breakout Retest
Price returning to test the former breakout level after the initial break — a resistance-turned-support confirmation and lower-risk entry point.
BeginnerDouble Bottom
Two consecutive troughs at approximately the same price level, forming a "W" shape, signalling support and potential upside reversal.
BeginnerHead and Shoulders
A three-peak reversal pattern where the middle peak (head) is tallest, flanked by two shorter peaks (shoulders), signalling a trend top.
BeginnerNeckline
The support or resistance level connecting the lows (or highs) of a reversal pattern — the line whose break confirms the pattern.
BeginnerReversal Pattern
Any pattern that signals a change in the prevailing trend direction — Head and Shoulders, Double Tops/Bottoms, and wedges at extremes are classic examples.
BeginnerRounding Bottom
A gradual, semicircular base where selling pressure slowly transitions to buying — a long-term bullish reversal pattern.
IntermediateTriple Bottom
Three tests of the same support level that all hold, signalling firm demand and a likely bullish breakout above the intervening peaks.
Beginner