Inverse Head and Shoulders Pattern: Complete Trading Guide

Master the reliable bottom reversal pattern that signals the potential end of a downtrend and the beginning of an upward price movement.

Understanding the Pattern

What is an Inverse Head and Shoulders?

The inverse head and shoulders (IHS) pattern, also known as a "reverse head and shoulders" or "head and shoulders bottom", is a chart formation that signals a reversal in a downtrend. The pattern consists of three successive troughs, with the middle trough (head) being deeper than the other two troughs (shoulders).

Key Components

  • Left Shoulder: Initial price trough in the downtrend
  • Head: Lower trough representing the lowest point
  • Right Shoulder: Final trough at similar level to left shoulder
  • Neckline: Resistance line connecting the peaks between troughs
  • Volume Pattern: Typically highest at left shoulder, lower at head, increasing at right shoulder

Pattern Calculator

Analysis Tools

Pattern Measurement Tool

Volume Analysis

Historical Success Rate Calculator

Real Market Examples

Trading Guidelines

Optimal Entry Points

  • Neckline Breakout: Primary entry signal when price breaks above neckline
  • Retest Entry: Secondary opportunity during neckline retest
  • Volume Confirmation: Entry validated by increasing volume on breakout

Stop Loss Placement

  • Conservative: Below right shoulder low
  • Moderate: Below neckline after breakout
  • Aggressive: Below halfway point between neckline and right shoulder

Profit Targets

  • Minimum Target: Distance from head to neckline projected upward
  • Extended Target: 1.618 Fibonacci extension of pattern height
  • Trailing Stop: Implemented after first target reached