1. You are right about volume, it should be included in the program for a valid H&S. But there are a couple of other problems as well, such as what consists of a decisive neckline break, and whether its better to trade a pullback to the neckline than the original neckline break (I certainly think it is and that is what I try to do).
2. Ive posted on the "negative value" problem, when a H&S is large relative to the price, and the answer is quite simple. You should be using ratios, so that
TARGET/NECKLINE = NECKLINE/TOP.
This gives a higher target than the usual simple subtraction (But its pretty much the same target if the H&S is small)
3. Yes a H&S can be and often is a continuation pattern rather than a topping pattern. Target remains the same.
4. Reverse H&S are harder to spot (they usually take the form of a "cup with handles") and the volume rule doesnt hold. They are almost always bottoming and rarely continuation patterns - but I can show you a couple of brilliant examples of such on the Dow, once in 1928 and again in 1997 and in 1998.
