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Head & Shoulders Bottom
aka inverse or inverted Head and Shoulders bottom and "Kilroy Bottom"
Definition

More:  Head & Shoulders Top
Technical_Analysis_Of_Stock_Trends





 
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


Notes:
  • The pattern is not in play until the neckline is broken.
  • Once broken, the neckline resistance level becomes support
  • Without volume support, the breakout is suspect.
  • The price target for the pattern is found by measuring the distance from the neckline to the bottom of the head. This distance is then added to the neckline to reach a price target
  • The neckline can be flat or slope to the left or right.  An upward slopw is more bullish than a downward slope.

More on "Head and Shoulder" chart patterns:

Technical_Analysis_Of_Stock_TrendsThe Bible for technical analysis, Technical Analysis of Stock Trends,

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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