Inverse head and shoulders

The mirror of the head and shoulders, drawn at the end of a decline rather than a rise. Price makes a low, recovers, makes a deeper low, recovers again to about the same area, and makes a third low higher than the second and roughly level with the first. The line drawn across the two intervening peaks is the neckline, and it can slope. The shape is a description of a sequence of highs and lows and nothing more.

Convention treats the formation as complete only when price closes beyond the neckline, and the conventional measured objective is the vertical distance from the head to the neckline projected from the point of the break. Some chartists additionally require volume to be heavier on the third trough's recovery than on the second's. Where a break is followed by a return to the neckline, that return is described as a throwback. All of this is convention, and its boundaries are drawn differently by different practitioners.

The difficulty is that the definition is loose. Nothing in it fixes how much deeper the head must be, how level the shoulders should sit, or over how many bars the shape must form, so two chartists marking the same chart produce different patterns and both can defend them. The shape is also only identifiable once its last leg has printed. Studies of chart pattern reliability disagree with one another, partly because they cannot agree on how to define the pattern being tested, and the honest summary is that the formation is a way of describing what price has already done.