$STEEM perform An inverse head and shoulders
1. **Left Shoulder**: The price declines to a new low, then rises.
2. **Head**: The price declines again, forming a lower low than the left shoulder, then rises.
3. **Right Shoulder**: The price declines once more, but not as low as the head, then rises.
4. **Neckline**: Draw a line connecting the peaks between the left shoulder, head, and right shoulder. This line is called the neckline.
** Trading Steps**
1. **Confirmation**:
- The pattern is confirmed when the price breaks above the neckline. Wait for a close above the neckline to confirm the breakout.
2. **Entry**:
- Enter a long position (buy) once the price closes above the neckline. Conservative traders might wait for a retest of the neckline as support.
3. **Stop Loss**:
- Place a stop loss below the lowest point of the right shoulder to minimize risk.
4. **Target Price**:
- Measure the distance from the head to the neckline. Add this distance to the breakout point to set your target price.
### Example
1. **Identification**: Suppose the price forms the left shoulder at $40, drops to $30 to form the head, rises back to $35, then drops to $32 to form the right shoulder, and the peaks between these are at $35 and $34.
2. **Neckline**: Draw a line connecting $35 and $34. This is your neckline.
3. **Confirmation**: Wait for the price to break above the neckline (say at $34.50).
4. **Entry**: Enter a long position at $34.50.
5. **Stop Loss**: Place a stop loss slightly below $32 (the right shoulder low), e.g., at $31.50.
6. **Target Price**: The distance from the head ($30) to the neckline ($34) is $4. Add this to the breakout point ($34.50) to get a target price of $38.50.
Trading the inverse head and shoulders pattern involves identifying the pattern, waiting for confirmation, entering at the right point, and managing risk with stop losses and profit targets.
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