This article was first published on Orbex Forex Trading Blog.
This content is synced from the rightful owners. Copyright on text and images belong to the original source.
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 ...
To keep reading this article, please navigate to: Orbex Forex Trading Blog.