Page 159 - THE MARKET WHISPERER

THE MARKET WHISPERER 15 7
Head and Shoulders Formation - AGCO

Inverse Head and Shoulders

The inverse head and shoulders is a bullish formation, and the opposite
of the head and shoulders. Similar to the cup and handle, here, too, the
structure shows candles consolidating beneath the line of resistance in
anticipation of its breakout.
The inverse head and shoulders, also a strong formation, is a favorite
among traders and draws more buyers than other formations.

The structure is comprised of a left shoulder indicating a high price, a
head indicating the downward correction and a return upwards to the line
of resistance, then a right shoulder indicating a further correction, and a
return of the price back to the line of resistance. The breakout through
resistance is also the point of long entry.