Chart of the Week: Nasdaq Head & Shoulders Formation?

Thursday, July 22, 2004 | 12:39 PM

All the major indices appear to be on the verge of tracing out a major continuation pattern: The Head & Shoulders. While often thought of as a reversal pattern at tops or bottoms, H&S is also a continuation pattern.

Nasdaq (1 year chart) Head & Shoulders Formation?
click for larger chart
nasdaq_hs_july_04
Source: StockCharts

If the indices manage to break through all of the resistance at the neckline, it provides both an upside impetus, as well as a “count” or upside target.



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Thursday, July 22, 2004 | 12:39 PM | Permalink | Comments (1) | TrackBack (0)
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Comments

IMHO, that isn't a head and shoulders. The right shoulder dips to the same level as the head, invalidating the pattern.

Besides, given that this is the third test of roughly the same level (i.e., 1870-1900), a sustained bounce should be less likely because the pool of potential buyers was depleted in the last two tests of that zone. The more tests of a particular support level, the less likely it will hold...

Posted by: Yasser | Jul 24, 2004 5:28:07 PM

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