Would you mind if we properly call it a flag? A flag is a consolidation of an existing trend. A head & shoulders pattern "reverses" a previous trend. In this case, the previous market action is up. Just to keep us all using the same language. I see what you mean about the look of it. But a way to look at it is that you need to have a body in order to have a head&shoulders. Either way you want to call it, I will call it a flag pattern, in case I can't get you to change your mind. All the best, Tim
I don't mind if you want to call it a flag at all, i believe we are all seeing it as bullish consolidation. I would refer you to Edwards & Magee who discuss H & S formations as legitimate consolidation patterns. The common use of the pattern is as a signal for the reversal of a trend, as you have mentioned. They can also, however, appear during a trend and be used to confirm continuation of that trend, which I believe to be the case here. Best, Dom
Very good point, thank you! Anyway, we should understand what stands behind these patterns and price itself - demand and supply, traders and investors taking their decisions to buy and to sell and our job is to measure the sentiment. In this case it is bullish.