Chart Patterns: Complex Head & Shoulders
by, 06-23-2011 at 10:03 PM (2996 Views)
Disclosure: The Chart Pattern blogs are exercises not meant to be traded off of within the TSP system of rules. I myself don't trade chart patterns within the the major indexes on the daily timeframe and I don't recommend you do either. The lack of flexibility in acquiring the right entry & exit make these patterns difficult to trade. Add to this the fact the major indexes are watched by everyone and often times when everyone is watching the same chart pattern, it does not come into fruition.
This pattern is NOT a Complex Head & Shoulders formation, but it could become one. Here we have an inner H&S within a larger H&S. Be forewarned that forecasting patterns is like the Weatherman telling you when a tropical storm is going to become a hurricane and where it's going to land. Sometimes it happens, but most of the time it doesn't. As you can see, this pattern appears to be making an attempt to form the Right Shoulder. Based on current levels I've forecast a price objective of 1315-1330. Within the larger H&S, if the Right Shoulder were to form, then come back down and break through the neckline at 1265, then the Price Objective would be 1165.