Reports Of An 'IHS' Are Exaggerated
Ryan Mallory | Nov 06, 2013 11:21AM ET
I had a couple of questions yesterday about the 'IHS' that had formed on the ES chart.
I hadn't been showing this and that's because it isn't actually a valid IHS. Any H&S pattern must be a reversal pattern by definition, and if an H&S pattern occupies a large majority of the trend leading into it then it isn't a reversal pattern. If it isn't a reversal pattern then the historical stats for the performance of these patterns do not apply. I see these form regularly though and while they break the neckline less often they do often make the 'target' after doing so. FWIW the 'target' on this one would be in the 1781 area and it has already broken over the neckline at 1764. ES 60min chart:
I'll be watching the RUT chart to see whether RUT gaps over the IHS neckline at the open. If so I wouldn't generally expect to see that opening gap fill today and I would be looking for that test of the current highs on RUT and SPX this week, and very possibly today. My ideal target area would be 1780-5 on SPX. The main support level I will be watching today is the weekly pivot on ES at 1757.40 (approx 1762.40 SPX).
Source: Channels and Patterns
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