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trade Head and Shoulders

Standard and Inverse Head & Shoulders are two sides of the same coin and are the exact opposite of each other. That said, both signal the end of a directional move and hint at a reversal.

A standard Head & Shoulders is always formed at the top of the chart and, upon successful completion, signals a bearish reversal.

An inverse Head & Shoulders is the exact opposite. It is always formed at the bottom of the chart and signals a bullish reversal.

Why Do Reversals Occur?

In hindsight, price reversal occurs when the trend in any one direction is about to end. That is to say, a trend is about to change, either in the short or long term.

The latter usually occurs when fundamentals stop supporting the direction of the ongoing trend due to a drastic shift in economic factors. It could either be that economic data starts to print weaker numbers or, alternatively, better than expected economic activity starts to point to a stronger recovery.

These fundamental factors could very from ...

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