The reverse formation (also known as formation) is one of the most popular and reliable formations used in . As the name suggests, it has a shape similar to the head and shoulder. This bottom pattern usually signals a change in price trend. When it occurs the security is likely to move against the previous downtrend. In other words, a completed reverse in gold means that gold is likely to rally.
The reverse formation is characterized by 2 similar lows (called shoulders) and one higher low called head. Neckline is determined by the tops between shoulders and head. Price can go over neckline, but when the price will come back to the neckline it will reflect of it.