Crypto and stock traders view the inverse head-and-shoulders pattern as an early signal that a bullish trend reversal is in the making.
Every trader aims to buy low and sell high, but only a few are able to muster the courage to go against the herd and purchase when the downtrend reverses direction.
When prices are falling, the sentiment is negative and fear is at extreme levels, but it’s at times like these that the inverse head and shoulders (IHS) pattern can appear.
The (IHS) pattern is similar in construction to the regular H&S top pattern, but the formation is inverted. On completion, the (IHS) pattern signals an end of the downtrend and the start of a new uptrend.