A good chart technician always remember these two things:
a) No chart pattern is infallable. It works most of the time but not always.
b) He must always be on the alert for chart signs that his analysis is incorrect.
'Head and shoulders' pattern can fail. John J. Murphy mentioned in his book Technical Analysis of the Financial Markets, "Once prices have moved through the neckline and completed a head and shoulders pattern, prices should not recross the neckline again. Any decisive close back above the neckline is a serious warning that the initial breakdown was probably a bad signal, and creats what is often called, for obvious reasons, a failed head and shoulders".
Looking at the charts for Dow and S&P, a failed head and shoulders can not be ruled out at this stage.
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