Lesson #50 What is Reverse Head and Shoulders? What Should Forex Investor Learn For Future Trading?

Reverse head and shoulders as the name suggests is just the opposite to trend of head and shoulders. Here a valley is created by the price lows followed by a second one which is lower than the first one. After this there is yet another valley which is now as low as the first two valleys. This is the reverse head and shoulders formation.

Chart Currently Unavailable

As you can see in the above graph, there is a clear formation of reverse head and shoulder. Here too, the neckline is very important. Formation of neckline should be done by joining the point of lowest price and the highest prices after the second shoulder.

Chart Currently Unavailable

Here too, you should place an entry level order to be prepared after there is a break in this trend. This can be done by placing the order above the neckline of course. Here if you want to know the minimum extent of price rise you can do so by measuring the distance between neckline and the head and using the same distance for price rise. You can place the order around this level.

However, it is ideal to play safe and put a bid around the predictable rise. You may be exposing yourself to a risk if you place it higher.