What is a head and shoulder chart pattern?

The Head and Shoulders chart pattern is a heavily used charting pattern, giving easily understood potential buy and sell signals. The chart of Home Depot (HD) below shows a Head and Shoulders pattern: These are the main components of a head and shoulder chart pattern:

How reliable is a head and shoulders chart?

The head and shoulders chart is said to depict a bullish-to-bearish trend reversal and signals that an upward trend is nearing its end. Investors consider it to be one of the most reliable trend reversal patterns. How Reliable Is a Head and Shoulders Pattern?

What is the opposite of a head and shoulders chart?

The opposite of a head and shoulders chart is the inverse head and shoulders, also called a head and shoulders bottom. It is inverted with the head and shoulders bottoms used to predict reversals in downtrends. This pattern is identified when the price action of a security meets the following characteristics:

What is the reverse Head & Shoulders pattern?

The opposite of the Head & Shoulders pattern is the Reverse Head & Shoulders pattern which is another strong pattern, this time a bottoming pattern. The reasoning behind a Head & Shoulders pattern is as follows: Left Shoulder: Bears push prices downwards making new lows; however, bulls begin to return and push prices slightly higher.