Instructions

An inverse head and shoulders pattern can be spotted on any time, and traded in the same manner. It doesn’t matter if it’s a 1,5,10, or even 60 minute chart. The chart that I will be using is a 10 minute chart of the symbol XLF, which tracks the movements of the financial stocks. An inverse head and shoulders pattern will form when the price carves out a left shoulder, head, and right shoulder. It is fairly easy to recognize as the two shoulders will dip to nearly the same price level, and the head will clearly mark the lowest price. I have outlined the inverse head and shoulders pattern in white.

Not all inverse head and shoulders patterns play out. Once the price breaks and closed above the neckline, you will enter your trade. If price fails to break the neckline, then the pattern failed. I have drawn a pink arrow to indicate where price broke above the neckline, which is where you would enter your buy order.

Tips & Warnings

• Photo Credit Microsoft Word Clip Art

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