Textbook example of the Head & shoulder Pattern..!
What Is a Head and Shoulders Pattern?
A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, where the outside two are close in height and the middle is highest. In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.
The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.
How Can I Use the Head and Shoulders Pattern to Make Trading Decisions?
The most common entry point is a breakout of the neckline, with a stop above (market top) or below (market bottom) the right shoulder. The profit target is the difference between the high and low with the pattern added (market bottom) or subtracted (market top) from the breakout price. The system is not perfect, but it does provide a method of trading the markets based on logical price movements.
Today is the first day that S&P 500 closed below the neckline, another wave of sell could be started today!
Based on this model another 3.2% decline in the coming month of October 2021 is likely.
Moshkelgosha
Reference article:
https://www.investopedia.com/terms/h/head-shoulders.asp
A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, where the outside two are close in height and the middle is highest. In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.
The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.
How Can I Use the Head and Shoulders Pattern to Make Trading Decisions?
The most common entry point is a breakout of the neckline, with a stop above (market top) or below (market bottom) the right shoulder. The profit target is the difference between the high and low with the pattern added (market bottom) or subtracted (market top) from the breakout price. The system is not perfect, but it does provide a method of trading the markets based on logical price movements.
Today is the first day that S&P 500 closed below the neckline, another wave of sell could be started today!
Based on this model another 3.2% decline in the coming month of October 2021 is likely.
Moshkelgosha
Reference article:
https://www.investopedia.com/terms/h/head-shoulders.asp
Comment:
Comment:
"Buy and hold becomes mantra at the end of a bull market. Buy and
hold becomes anathema at the end of a bear market. Thanks to the
raging bull for those 10 years, everyone is preaching buy, hold,
patience. However, if you had invested in the market in 1969, you
would be at a significant loss in 1983, especially given the high
inflation of the times and the down market. In the early 50's, the
common logic was that stocks simply don't go up, thanks to the
doldrums market from the mid 30's to the mid 50's." Michael J Burry
hold becomes anathema at the end of a bear market. Thanks to the
raging bull for those 10 years, everyone is preaching buy, hold,
patience. However, if you had invested in the market in 1969, you
would be at a significant loss in 1983, especially given the high
inflation of the times and the down market. In the early 50's, the
common logic was that stocks simply don't go up, thanks to the
doldrums market from the mid 30's to the mid 50's." Michael J Burry