Inverse Head & Shoulders not Just for Reversals

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Inverse Head & Shoulders not Just for Reversals

One of the patterns I noticed tonight as I was going through RS Movers lists was this inverse head and shoulders pattern (Inv HnS) on $STI.

The pattern is pretty clear, the symmetry is good, the volume is workable.  It looks about ready to go with a measured move (MM) of 29.  If we zoom out we see this pattern formed as a continuation pattern and not the normal reversal pattern.

This view shows clearly that the pattern comes after a strong move off the December lows.  The pause in the run came at a resistance point that makes sense. But now seems to be setting up for the next move higher

The goal here is to understand why these patterns form.  They are a picture of the psychology of buyers versus sellers at this particular level.  That psychology is very similar to the battle that takes place at a bottom or any potential inflection point.  The key is potential inflection, but in this case if the buyers win the battle (which the pattern suggests they might be) no inflection will happen.  Anytime you see patterns on a chart, if you understand the thinking behind each side it makes the read a whole lot easier.  There are many reversal patterns these same ideas will work with.

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(All market data above are derived from, Esignal, and Reutersdatalink)
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About Author


is a Chartered Market Technician (CMT) and Certified Financial Planner (CFPr) in Greensboro Georgia (Outside Atlanta). Founding partner of Barber Lackey Financial Group, LLC, a Registered Investment Advisor. However, this blog is not affiliated with BLFG and does not make recommendations to buy sell or hold any securities.