The inverse head and shoulders is a bullish reversal pattern that has been formed after a downtrend. It will find support and create a left shoulder, find resistance, than break down lower to create a head. The buyers will than step in to and push it past the left shoulder resistance, to the neckline resistance.The sellers will step in and push it back to the left shoulder support.

What is the psychology behind the inverse head and shoulders pattern

The Psychology of the inverse head and shoulders pattern is that price action broke the previous lower low (Left shoulder), and now a new low (Head). In price action when it makes a lower low the previous low needs to hold as resistance. In this pattern that previous resistance does not hold, and prcie action keeps pushing pass the new formed resistance. creating a change of character. When it comes back downwe will look for a higher low to be formed. creating a right shoulder.

How to trade the Inverse Head And Shoulders pattern and be profitable

1) One way to trade the inverse head and shoulders reversal pattern is to wait until the neckline is broken by price action. once you get the confirmation that neckline support did not hold you can look to go long on the trade.

2) Another way to trade the inverse head and shoulders pattern is to wait for a pull back to the neckline that was formed. once it retraces back to the neckline look to go long.

3) The last way you can trade the inverse head and shoulders pattern is to take a early trade at the right shoulder. Since the left shoulder support did not hold from the head that was created, with bullish price action we will look for a higher low to be formed at the right shoulder.