A Head and Shoulders pattern is usually considered a bearish reversal pattern. It normally appears after an uptrend and may indicate that the previous upward trend is losing strength. The pattern consists of three peaks.

• Left Shoulder: The first peak, followed by a pullback.
• Head: The second and highest peak, higher than the left shoulder.
• Right Shoulder: The third peak, usually lower than the head.
• Neckline: A support line connecting the two pullback lows.

Confirmation: The pattern is confirmed when the price breaks below the neckline.

An Inverse Head and Shoulders pattern (IHS) is usually considered a bullish reversal pattern. It normally appears after a downtrend and may indicate that the previous downward trend is weakening. The pattern consists of three troughs.

• Left Shoulder: The first low, followed by a rebound.
• Head: The second and lowest low, lower than the left shoulder.
• Right Shoulder: The third low, usually higher than the head.
• Neckline: A resistance line connecting the two rebound highs.

Confirmation: The pattern is confirmed when the price breaks above the neckline.

In simple terms, Head and Shoulders is a bearish reversal pattern that may signal the end of an uptrend, while Inverse Head and Shoulders is a bullish reversal pattern that may signal the end of a downtrend.

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