Definition of the Head & Shoulder Bottom (Reversal) pattern also know as "Inverted Head and Shoulder Pattern," "Kilroy Bottom" and "Inverse Head and Shoulder Pattern." This pattern relies more heavily on volume for confirmation than then head and shoulder top pattern.
The "Inverted Head and Shoulder Pattern" marks a major trend reversal. The pattern is made by three successive lows with the center low the lowest and the outside "shoulder" lows higher and ideally equal distrance from the neckline. The neckline is formed by the hights between the shoulders. The necline is often tested from above before the pattern takes off which gives conservative traders a second chance to buy the breakout.
Chart above courtesy of stockcharts.com
More on "Head and Shoulder" chart patterns:
by Robert Edwards and John Magee
Chapter 6 "Important Reversal Patterns" has many examples and details about the important "Head-and-shoulders" reversal pattern.
Chapter 7 "Important Reversal Patterns - Continued" starts out with the "Head-and-Shoulders Bottom" reversal pattern.
"Kilroy Was Here" Image
Image from Wikipmedia Commons
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