Head & Shoulders pattern
Anthony M. Cherniawski | Nov 11, 2011 07:08AM ET
Yesterday’s action in the indexes left us some clues as to its probable intent as a follow-through. There appears to be a complex Head-and-Shoulders pattern developing with a neckline at 1226. Sure enough, a bounce developed in the pre-market futures, portending a retest of mid-cycle support/resistance at 1243.37 and a right shoulder which completes the pattern.
It appears that we may see a gap up to mid-cycle resistance and a quick turnaround to lower levels. The Head and Shoulders pattern gives us a minimum target of 1175 with a probable bounce back to cycle bottom support/resistance at 1199.62 [round number (1200) support/resistance] or the Broadening Wedge trendline at 1220, at most.
Please see the attached chart below.
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