12 replies to this topic

[skott]

Here is the chart

http://img521.images...shoulderpq9.png

notice how much farleys ADA has diverged even though we made a new rebound high last week and today. AS I QQQQ closed the gap exactly today but the NDX index did not. Let's see if we close below the gap today.... i.e below 44.48 on QQQQ

Also notice the rising bearish wedge since the march double bottom. 4 year cycle low is still out there.....yet to be seen. average decline is 24%

Edited by skott, 09 April 2007 - 02:08 PM.

[fib_1618]

Where's the daily volume to either confirm or deny such a pattern? Fib

[skott]

fib, from what I know and read there is no absolute essential requirements regarding volume with this pattern. However, most of the ideal requirements are present. If you need to see volume with this chart and don't have access to charts yourself(unlikely) let me know. Big key is volume went way up when we dropped from the head. for those with futures I knew coming into today that naz100 futures 1824.25 was and is key. guess where they closed it? 1824.25 another important pattern involving highs and lows of a weekly moving average have given the perfect setup for lower prices. key will be weekly closes from now on.

[fib_1618]

from what I know and read there is no absolute essential requirements regarding volume with this pattern

Volume considerations of any geometric bar chart pattern is paramount for true identification of the pattern as far as its potential merit.

In the case of a Head and Shoulders pattern, you will see high volume on the left shoulder, higher volume at the head, and below average volume on the right shoulder. If you don't see this typical pattern structure relationship, it's more than likely a high level price consolidation - also known as a trading range.

Fib

[skott]

not what I have read..... for instance on stockcharts.com. read their definition

[fib_1618]

not what I have read..... for instance on stockcharts.com. read their definition

The "definition" provided a broad representation of the pattern with no substance.

However, I did find this link at Stockcharts that does go into greater detail that you might want to review at your leisure.

Although this further clarification of the pattern is more on the mark, it's also incomplete as to why these patterns trace out to begin with.

Anyway....every single price pattern needs daily volume considerations to be addressed to verify if a pattern is the pattern as described by its title or not. Without this important information, "looks" can be quite deceiving, no less, bust a trade.

Fib

[selecto]

Among other things, you want lower volume across the formation of the top then increasing on the right shoulder and breaking through the right neckline with biggger volume still. Until you get the neckline break, you have no trading signal, and even then, the better signal (some say) comes on a failed retest of the neckline. The reliablity of the pattern's prediction is entirely dependent upon the "right" volume being in the "right" places across its formation. I don't thinki we have the "right" volume already, but it doesn't matter until one sees what happens at the right neckline. The H&S is one of the most abused chart patterns there is. Just cuz it looks like a duck...

[skott]

The right shoulder has taken the form of a rising bearish wedge

Double H&S Top

[fib_1618]

The right shoulder has taken the form of a rising bearish wedge

And without volume considerations, what maybe a bearish wedge might actually be a leading diagonal.

Fib

[skott]

fib, everything I have posted is based on an overiding volume consideration. Huge gap down in the market with HUGE volume. This is a big clue for everything that happens afterwards. That day was the worst breadth day since 1926. if this is a leading diagonal , I don't seem the impulsive waves within it.