Definition
Inverse Head and Shoulders forms at market bottoms and signals a bullish reversal. It has three troughs with the middle (head) being the lowest. A break above the neckline confirms the pattern with an upside target equal to the head-to-neckline distance.
Formula
Price Target = Neckline + (Neckline - Head)
Example
If head is at $30, neckline at $40, target is $50 ($40 + $10). This bullish pattern often marks significant market bottoms after prolonged downtrends.
FAQ
What is Inverse Head and Shoulders?
A bullish reversal pattern with three troughs, the middle being lowest.
How do you calculate Inverse Head and Shoulders?
A common formula for Inverse Head and Shoulders is: Price Target = Neckline + (Neckline - Head)
Why is Inverse Head and Shoulders important?
Inverse Head and Shoulders helps investors evaluate chart patterns and make more informed decisions.