The Inverse Head and Shoulders is a bullish pattern where the stock is expected
to go up considerably once the stock breaks what is referred to as its “neck line”.
See the Inverse Head and Shoulders below. Also note the bigger than average volume
that pushed it through the neck line on the breakout.
This pattern will have a low followed by an even lower low, followed by a higher
low. Then there will be a break above the neck line.
The below chart of Exxon is a regular Head and Shoulders pattern and is a bearish
pattern that is marking a top in the stock. The stock is expected to have an accelerated
decline once the stock breaks below the neck line.
This pattern has a high followed by a higher high and then a lower high.