Inverse Head and Shoulders
Inverse Head and Shoulders is a bullish reversal with three troughs — left shoulder, deeper head, right shoulder at roughly the same depth as the left — that confirms with a close above the neckline formed by the two intervening highs.
What it measures
Same geometry as H&S, inverted. Requires a prior downtrend and a middle low significantly below the two shoulders. The neckline can be flat or gently sloped; the confirmed break above it, ideally with volume, triggers the pattern.
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| shoulder_tolerance_pct | 3 | 1–8 | How close the two shoulders must be. |
| head_min_prominence_pct | 3 | 1–10 | Minimum head depth below the shoulders. |
How it behaves
Volume typically expands on the head, contracts on the right shoulder, then expands again on the neckline break — the reverse of the distribution signature seen at tops. Retests of the neckline from above act as classical entries.
When it misleads
Same primary failure mode as H&S — many apparent inverse H&S in strong downtrends resolve as pauses. Require a real downtrend context, strict shoulder symmetry, and confirmation before entry. Neckline breaks that fail back inside the pattern within 1–3 candles are invalidated and often mark continued decline.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- How is the price target calculated?
- The height from the head to the neckline, added to the break point. Take partials near it — full targets are hit less than half the time in most instrument samples.
- Volume signature — is it required?
- Not strictly required, but a break without volume expansion is much less reliable. A volume-thin breakout is the most common failure mode.
- Inverse H&S vs Double/Triple Bottom?
- They share the reversal idea but differ in structure — inverse H&S has an asymmetric middle (the head is deeper), double/triple bottoms have symmetric lows. Inverse H&S usually implies more prior distribution and often projects larger moves.
Build a strategy with Inverse H&S
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