📖 Lesson: Head and Shoulders & Inverse Head and Shoulders

🎯 Objective: Recognize this powerful reversal pattern that appears at market turning points.

🔺 Head & Shoulders (H&S) – Bearish Reversal

• Formation:

• Left Shoulder → Peak followed by pullback

• Head → Higher peak followed by deeper pullback

• Right Shoulder → Lower peak than head

• Neckline: Connects the two pullbacks (support)

• Signal: Breakdown below neckline → trend reversal

📌 Entry: Short after neckline break + volume confirmation

📌 Stop Loss: Just above right shoulder

📌 Target: Measure distance from head to neckline and project downward

🚫 Trap: Early entry before confirmation often leads to fakeouts.

🔻 Inverse Head & Shoulders – Bullish Reversal

• Formation:

• Left shoulder → Low

• Head → Lower low

• Right shoulder → Higher low

• Neckline: Resistance connecting the peaks

• Signal: Breakout above neckline = trend reversal up

📌 Entry: Buy on breakout (or retest)

📌 Stop Loss: Below right shoulder

📌 Target: Height from head to neckline projected up

💡 This pattern often marks the bottom of major downtrends