Inverse Head & Shoulders Technical Pattern

Learn about the Bearish Head-and-Shoulders pattern in stock trading - a reversal pattern that signals potential downward movement. Understand how to identify and trade this technical analysis pattern effectively with volume analysis and key indicators.

Recent Inverse Head & Shoulders Patterns

15 patterns found

Warrior Met Coal Inc

US Market Cap: 2.29B Industry: Coking Coal
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Forbo Holding AG

CH Market Cap: 1.54B Industry: Building Products & Equipment
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

ICON PLC

IE Market Cap: 12.38B Industry: Diagnostics & Research
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Ferro S.A.

PL Market Cap: 216.91M Industry: Building Products & Equipment
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Trex Co Inc

US Market Cap: 5.88B Industry: Building Products & Equipment
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Neuren Pharmaceuticals Ltd

AU Market Cap: 1.25B Industry: Biotechnology
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Shoe Carnival Inc

US Market Cap: 585.79M Industry: Apparel Retail
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

IGO Ltd

AU Market Cap: 2.18B Industry: Other Industrial Metals & Mining
Inverse Head & Shoulders
7/10/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Zymeworks Inc

US Market Cap: 1.02B Industry: Biotechnology
Inverse Head & Shoulders
7/9/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Celldex Therapeutics Inc

US Market Cap: 1.35B Industry: Biotechnology
Inverse Head & Shoulders
7/9/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

ENERSENSE INTERL. OYJ

FI Market Cap: 52.63M Industry: Specialty Business Services
Inverse Head & Shoulders
7/9/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Selecta Biosciences Inc

US Market Cap: 277.19M Industry: Biotechnology
Inverse Head & Shoulders
7/9/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

Silence Therapeutics PLC

GB Market Cap: 273.46M Industry: Biotechnology
Inverse Head & Shoulders
7/9/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

OPmobility

FR Market Cap: 1.86B Industry: Auto Parts
Inverse Head & Shoulders
7/9/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

DoubleVerify Holdings Inc

US Market Cap: 2.64B Industry: Software - Application
Inverse Head & Shoulders
7/9/2025
Bullish reversal pattern with three troughs, the middle being lowest, often signaling a trend change from bearish to bullish

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About Inverse Head & Shoulders Patterns

Inverse Head & Shoulders patterns are technical chart formations that traders and investors use to identify potential entry and exit points. These patterns are based on historical price movements and can help predict future price direction.

Understanding the Bearish Head-and-Shoulders in Stocks

What is the Bearish Head-and-Shoulders Pattern in Stocks?

The Bearish Head-and-Shoulders pattern is a reversal pattern that appears at the end of an uptrend, indicating a potential downward movement. This pattern forms when the price of a stock creates three successive peaks, with the middle peak (head) being the highest, flanked by two lower peaks (shoulders). In stock trading, the Bearish Head-and-Shoulders pattern is significant because it often marks the end of a bullish phase and the beginning of a bearish trend. Recognizing this pattern can help traders anticipate price movements and make strategic trades.

How to Identify Bearish Head-and-Shoulders Patterns

Identifying the Bearish Head-and-Shoulders pattern involves several key steps:
  1. Initial Uptrend: Look for a clear uptrend where the price reaches new highs.
  2. Left Shoulder: The price hits a high point, falls, and then rises again.
  3. Head: The price forms a higher high than the left shoulder and falls again.
  4. Right Shoulder: The price forms a lower high, similar to the left shoulder, and then falls.
  5. Neckline Breakout: The price breaks below the neckline, confirming the pattern.

Identifying a Bearish Head-and-Shoulders Pattern

In this example, we use a typical candlestick chart to illustrate the formation of a Bearish Head-and-Shoulders pattern. Key elements to observe include the initial uptrend, the formation of the left shoulder, head, and right shoulder, and the subsequent breakout.
  1. Initial Uptrend: The price of the stock shows a clear uptrend, indicating bullish market sentiment.
  2. Left Shoulder: The price hits a high point and then falls.
  3. Head: The price forms a higher high and then falls.
  4. Right Shoulder: The price forms a lower high, similar to the left shoulder, and then falls.
  5. Breakout Confirmation: The price breaks below the neckline, confirming the pattern.

Bearish Head-and-Shoulders Pattern

Bearish Head-and-Shoulders Pattern Chart Example

Key Indicators

  • Candlestick Patterns: Look for reversal candlestick patterns near the shoulders.
  • Volume Spikes: Increased trading volume often accompanies the breakout, indicating strong selling interest.
  • Resistance Levels: The shoulders should align with significant resistance levels on the chart.

Bearish Head-and-Shoulders Pattern with Volume Analysis

This example highlights the role of volume in confirming the Bearish Head-and-Shoulders pattern. Volume analysis can provide additional confidence in the pattern's validity.
  1. Initial Uptrend: The price trend is upward, characterized by increasing prices and moderate volume.
  2. Left Shoulder: The price hits a high point with moderate volume as sellers begin to enter the market.
  3. Head: The price forms a higher high with moderate volume and then falls.
  4. Right Shoulder: The price forms a lower high with moderate volume and then falls.
  5. Breakout: The price breaks below the neckline with a significant spike in volume, confirming the pattern.

Bearish Head-and-Shoulders Pattern with Volume

Bearish Head-and-Shoulders Pattern with Volume Analysis Chart

Frequently Asked Questions

What is the Bearish Head-and-Shoulders pattern in stock trading?

The Bearish Head-and-Shoulders pattern in stock trading is a reversal pattern that appears at the end of an uptrend. It indicates a potential downward movement and is characterized by the price forming three successive peaks, with the middle peak being the highest, flanked by two lower peaks.

How reliable is the Bearish Head-and-Shoulders pattern in stocks?

The Bearish Head-and-Shoulders pattern is considered a reliable bearish reversal signal in stock trading, especially when confirmed by increased trading volume and a strong breakout below the neckline. However, it should be used alongside other technical analysis tools.

Can the Bearish Head-and-Shoulders pattern appear in any stock?

Yes, the Bearish Head-and-Shoulders pattern can appear in any stock. It is a widely applicable chart pattern used in technical analysis across various assets, including stocks.

What common mistakes should be avoided when trading the Bearish Head-and-Shoulders pattern?

Common mistakes include entering the trade too early before the neckline breakout confirmation, not confirming the pattern with volume analysis, and failing to set appropriate stop-loss levels to manage risk. By understanding and utilizing the Bearish Head-and-Shoulders pattern, traders can better anticipate bearish reversals and optimize their trading strategies for improved outcomes in the stock market.

What are the key indicators to consider when trading the Bearish Head-and-Shoulders pattern in stocks?

Key indicators include identifying significant resistance levels, confirming the pattern with increased volume during the breakout, and observing reversal candlestick patterns near the shoulders. These indicators help validate the Bearish Head-and-Shoulders pattern and provide insights for potential significant price movements.