Inverted head and shoulders chart pattern
An inverted head and shoulders is three lows with the middle one deepest, after a fall. Learn the rules, the neckline above, where it fails, and tap the head.
An inverted head and shoulders is three lows in a row: a left shoulder, a deeper head, then a right shoulder near the first one's level. The highs between them form the neckline above (on this site: head at least 2% below both shoulders, shoulders within 3% of each other, the two highs within 2%).
Practice: tap the head
How to identify it (the exact rules)
These are the rules this site uses to build and grade every chart. Traders do not all use the same numbers; ours are published so you can check every answer (see the methodology).
- Swing high: a candle whose high is above the highs of the 3 candles before it and not below the highs of the 3 after it, so a tie counts once, at the first candle (swing low: the mirror).
- Three consecutive swing lows: left shoulder, head, right shoulder.
- Head and shoulders: the head at least 2% above both shoulders; the shoulders differ by at most 3% of the head's price; the two troughs are within 2% of each other and both at least 2% below the lower shoulder (inverse: the head at least that much below both shoulders, mirror image).
- Both neckline points (the highest high between each shoulder and the head) are at least 2% above the higher shoulder. The neckline is their average.
What it shows
This is the bottoming version, and the story runs in reverse. Sellers drive price to a low and it bounces: the left shoulder. They push again and reach a deeper low, the lowest point of the shape: the head. The bounce that follows climbs back to about the same ceiling as the first one. Then sellers try a third time and give up early, well above the head: the right shoulder.
Each drop reaches less far, while the ceiling holds. That suggests supply is drying up rather than demand appearing in a rush. In the chart above, you tapped the head, which is the middle of the three swing lows and the deepest of them.
The parts, upside down
| Part | What it is | Rule on this site |
|---|---|---|
| Left shoulder | First of three swing lows in a row | Lower than the 3 candles on each side |
| Head | The middle swing low | At least 2% below both shoulders |
| Right shoulder | The third swing low | Within 3% of the left shoulder (measured against the head) |
| Neckline highs | The highest high on each side of the head | Within 2% of each other |
| Clearance | Gap between the shoulders and the highs | Both highs at least 2% clear of the shoulders |
| Neckline | The ceiling of the pattern | The average of the two highs |
People also call it an inverse or reverse head and shoulders, or a head and shoulders bottom. All four names describe the same shape. On this site it is built as the exact mirror of the top version: flip a head and shoulders chart upside down and the same rules apply.
Most often confused with: the double bottom
A double bottom has two lows at about the same depth. The inverted head and shoulders has three, and the middle one is clearly deeper. If the middle low dips less than 2% below the others, it is not a head on this site, and three lows at one level read closer to a triple bottom. The second mix-up is timing. After a sharp drop, any bounce can look like the start of a right shoulder. Without the third low in place, there is no pattern yet, only a hope that one will form.
What it does not tell you
It does not mark the bottom of the market. The head is only the lowest point so far, inside a short window. Most chart readers wait for a close above the neckline before calling the pattern complete, and even then it says nothing about how high price will go. The measured move convention takes the distance from the head up to the neckline and adds it above the break. That is a way to draw a reference line, not a prediction. And it says nothing about why price fell in the first place.
How reliable is it?
Lo, Mamaysky and Wang (2000) ran automated, kernel-regression pattern detection on US stocks from 1962 to 1996, and the inverse head and shoulders was among the shapes they tested. They reported that several patterns carried some incremental information about returns, which is not the same as being a profitable trading rule. Savin, Weller and Zvingelis (2007) later studied head-and-shoulders patterns on S&P 500 and Russell 2000 stocks and found little support for a stand-alone strategy, alongside some predictive power when combined with the market portfolio. When you read any study, check which version it tested: a result for tops does not carry over to bottoms by default. There is no reliable success rate for this pattern.
Where the idea is proven wrong
The idea is that sellers could not get back to the head's low. If price falls back below the right shoulder and then below the head, the sellers got their third push after all, and the "head" turns out to be just one step in a longer decline. The ceiling matters as much. While price stays under the neckline, the shape has not shown that sellers lost control. A bounce that never clears its ceiling is still part of the fall.
Volume
A common description has volume growing on the rally out of the right shoulder and on the break above the neckline. The exercise here does not grade volume: only the three lows and their depths decide the answer.
Frequently asked questions
Is an inverted head and shoulders bullish?
It is usually read as bullish because it forms after a decline and shows the last low getting shallower. Most chart readers treat it as complete only after a close above the neckline. Before that close it is an unfinished shape, and many unfinished shapes turn into lower lows. Bullish here describes the pattern's logic, not a promise about future prices.
Where is the neckline on an inverse head and shoulders?
It sits above the pattern. Take the highest high between the left shoulder and the head, and the highest high between the head and the right shoulder. On this site those two highs must be within 2% of each other, both shoulders must sit at least 2% below them, and the neckline is their average: a flat ceiling.
What is the difference between inverse head and shoulders and double bottom?
Count the lows and compare their depths. A double bottom has two lows at roughly the same level. An inverse head and shoulders has three swing lows in a row, with the middle one clearly the deepest: on this site, at least 2% below both shoulders. In both cases, chart readers usually wait for a close through the ceiling.
Can the right shoulder be lower than the left shoulder?
Yes, as long as it stays above the head and the two shoulders remain close in depth. This site allows a gap of up to 3% between them, measured against the head's price. A right shoulder that drops below the head is no longer a shoulder: the head would simply move.
Sources
- Lo, Mamaysky and Wang (2000), Foundations of Technical Analysis: Computational Algorithms, Statistical Inference, and Empirical Implementation. Journal of Finance 55(4) (Research paper)
- Savin, Weller and Zvingelis (2007), The Predictive Power of "Head-and-Shoulders" Price Patterns in the U.S. Stock Market. Journal of Financial Econometrics 5(2) (Research paper)
- Learn and protect (CFTC)