Hammer candlesticks form when a security moves significantly lower after the open, but rallies to close well above the intraday low. The resulting candlestick looks like a square lollipop with a long stick. If this candlestick forms during an advance, it is called a Hanging Man. Hanging Man candlesticks form when a security moves significantly lower after the open, but rallies to close well above the intraday low.
Head and Shoulders bottom
Head and shoulders (chart pattern) - Wikipedia
An Inverse Head and Shoulders pattern, upon completion, signals a bullish trend reversal. Traders typically enter into a long position when the price rises above the resistance of the neckline. Point 5 makes a higher low which is higher than both points 3 and 1 and this forms the third bottom. This illustrates that the downward trend is coming to an end although the reversal is confirmed when price pushes up through the neckline at point 6 moving up pass the previous high at point 4. It is also worth observing whether the descent into point 3 is less steep than into point 1 and whether the descent into point 5 is less steep than point 3.
Head and Shoulders Bottom
This pattern is identified when the price action of a security meets the following characteristics: the price falls to a trough and then rises; the price falls below the former trough and then rises again; finally, the price falls again but not as far as the second trough. Once the final trough is made, the price heads upward, toward the resistance found near the top of the previous troughs. Investors typically enter into a long position when the price rises above the resistance of the neckline. The first and third trough are considered shoulders and the second peak forms the head. A move above the resistance, also known as the neckline, is used as a signal of a sharp move higher.
The third edition of this book Encyclopedia of Chart Patterns has a table in most chapters discussing busted pattern performance. A stock forms a head-and-shoulders bottom which confirms as a valid pattern when price closes above the neckline or right armpit depending on neckline slope. This busts the upward breakout. For busted patterns in bull markets, the average drop is Those are the results from perfect trades.