Posted by: stockscooter | June 1, 2012

Head n Shoulder Within a Head n Shoulder

The H&S pattern is common because of its psychological structure.  The left shoulder and head form in euphoric bullishness.  The right shoulder forms in fear.  You will see in this chart that the NYSE has a giant H$S formed and a lesser degree H&S formed.  Each has a higher right shoulder, which is quite unique.  Is this repeating, unique pattern trying to tell us something?

H&S patterns have a neckline, represented by the yellow and red lines on the chart.  If you use this line as an axis, and flip the chart upside down in your mind, the head now becomes the new target for price.  The small H&S target is marked by the “X” at 4150.  You don’t want to know where the larger H&S target is located. (Hint: It’s not on the chart)

Not all H&S patterns resolve perfectly.  Many actually  break bullish, never to resolve in a bearish way.  Let’s hope this is the case.

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