What is inverse head and shoulder pattern?

An inverse head and shoulders pattern is a chart pattern that is commonly used in technical analysis to identify potential buy signals. It is the opposite of a traditional head and shoulders pattern, which is typically seen as a bearish reversal pattern.

The inverse head and shoulders pattern is formed by a series of three peaks, with the middle peak being the highest and the two outside peaks being lower. The pattern is thought to be a bullish reversal pattern because it indicates that the security's price may be reaching a support level and may be unable to break through to lower levels. When the price breaks through the neckline (a horizontal line drawn through the lows of the two outside peaks), it may signal that the downtrend has reversed and that the security is now in an uptrend.

It is important to note that the inverse head and shoulders pattern is not a guarantee that the price of a security will rise. It is simply a pattern that may suggest a potential trend reversal and should be used in conjunction with other technical and fundamental analysis tools to confirm a buy signal. In addition, inverse head and shoulders patterns can be subject to interpretation and may be influenced by the biases and expectations of the analyst. As a result, different analysts may come to different conclusions about the same data.