Inverse Head and Shoulders is a Bullish Reversal Pattern that is used in Technical analysis to look for signals of trend shift, from a downtrend to an Uptrend. This pattern is the Opposite of the Head and Shoulders pattern.
How to Trade the Pattern:
- Breakout Entry: Once the price breaks above the neckline, traders look for a buying opportunity.
- Target Price: The expected upward move is approximately equal to the distance from the head to the neckline.
- Stop-Loss: Placed below the right shoulder to limit downside risk.
The Breakout Level for the Inverse head and Shoulders is Rs. 23,500, and the Index is currently trading at Rs. 24,116 above the breakout level. The next resistance zone for the stock is around Rs. 24,780 to 24,870 levels. And the Nearest support zone for the Index is closer to the breakout zone for the stock, which is 23,500 to 23,580.
After the recent fall on the Nifty 50 Index, it has since recovered and given a Year to Date (YTD) return of 1.55 percent, and One Year return stands at 8.00 percent. The index is still down 8.22 percent from its 52-week high of 26,277, which it had formed in September of last year.
Written by – Abhishek Dass
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