Quick notes about Inverted Head and Shoulders

2018年3月3日

Hello dear friends,

this is more of a study than a chart.

Here is what i did:

* I sampled 16 IHS that showed over the past year and were visible on the 4hr chart.
* I took in consideration sloppy patterns but ignored the ones that didn't complete or patterns that were too small or too big to discern on the 4hr.
* targets are calculated roughly based on the closest fib as result, some targets have fallen slightly above or below that number.
* By target i mean the peak price that was reached after pattern completion and within the timeframe equal to the time length of the pattern itself, and before reached a lower point than the low tip of the right shoulder
* The outcome post pattern defines what happens after that pattern has reached its target within the calculated timeframe. Lower means the price dropped below the right shoulder lowest point, higher means the price continued climbing higher before any drop
* The way i calculate IHS targets might be a bit unusual, but it works well for me. I calculate the length of the head from its lowest point to the meeting point with the right shoulder. Target calculations are a fib percent of that height.
* Mind you, this is a quick study, nothing bulletproof or scientifically sound.

And here are my key findings:

1. Out of 16, 3 failed, 7 reached 100% or above
2. the average success score is a retrace of 67% of the head size within the time length equal to the time length it took the pattern to form
3. 50% of the time, the price dropped lower than the pattern right shoulder or more after reach the pattern target

Details:

[target reached in % of head size] / [outcome post pattern]

a. 50% / lower
b. 61.8% / higher
c. 100% / higher
d. 23.6% / lower
e. 100% / higher
f. 100% / higher
g. 0% / lower
e. 0% / lower
f. 23.6% / higher
g. 100% / lower
h. 78.6% / higher
i. 161% / lower
j. 23.6% / higher
k. 161% / lower
l. 0%/ lower
m. 100% / higher

Again please take these findings with a grain of salt, this is by no mean super accurate and can be prone to error. But as a broad overview, hope you'll find this insightful.

2018年3月7日

註釋

Here is another piece of information that seems relevant to the current context.
It's not uncommon for IHS to pullback right at breakout level. I've seen some noticeable pullback on 6 out of the 16 patterns.