inverted formation(redirected from Inverted Formations)
In technical analysis, a pattern that looks like the opposite of another pattern. For example, a saucer formation looks like a teacup on a chart, while an inverted saucer looks like a teacup that has been turned upside down. Obviously, an inverted formation gives the opposite signal from the "normal" formation. For example, a saucer is a bullish indicator, while an inverted saucer is a bearish indicator.
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In technical analysis, a chart pattern that is upside down from its usual configuration. For example, a saucer pattern is a U-shaped curve indicating a market bottom. An inverted saucer is an arched formation indicating a market top. When a chart formation is inverted, it indicates the opposite future stock movement of the basic formation. Thus, while a head-and-shoulders formation is a bearish indicator, an inverted head-and-shoulders formation is a bullish indicator.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.