Head and Shoulders formations

Sean K · 8 July 2008

New thread dedicated to stocks that have formed up a H&S, or reverse H&S.

These can pan out quite well for a trade going short of long.

Just probabilities of course.

We can ID them in here and follow them through to see if the targets were met, or thereabouts.

My first nom is BHP.

Looks to be breaking through the neckline where there should have been good support, and also looks like it may break the next important support at $40. The target coincides with long term support around $34.

Will be interesting to see if the principle is valided more than not.

Sean K · 11 July 2008

kennas said:
My first nom is BHP.

Looks to be breaking through the neckline where there should have been good support, and also looks like it may break the next important support at $40. The target coincides with long term support around $34.

Broken support at $40 by the looks.

Miner · 11 July 2008

kennas said:
Broken support at $40 by the looks.

So as per chart continuation BHP is heading towards $34 ?

The ASX 200 will get a thud surely

Cheers

Sean K · 11 July 2008

Miner said:
So as per chart continuation BHP is heading towards $34 ?

The ASX 200 will get a thud surely

Cheers

That's what the formation says.

Let's hope it doesn't work on this one!

panikhide · 11 July 2008

Nice observation Kennas. I was wondering when to get back into BHP

Your head and shoulders prediction would appear to be consistent with those predicting that the XAO will fall to 4700-4800.

brendan87 · 11 July 2008

How is this? TSE 1 year.

Sean K · 11 July 2008

brendan87 said:
How is this? TSE 1 year.

Good H&S, but hard to see it going though that long long term support.

Might though

Dutchy3 · 12 July 2008

This is a daily on PDN.

Might not be as noticeable on a bar chart

Volumes increased on the moves north to so a reasonable expectation of a base can now be supported

Sean K · 13 July 2008

Dutchy3 said:
This is a daily on PDN.

Might not be as noticeable on a bar chart

Volumes increased on the moves north to so a reasonable expectation of a base can now be supported

Aaaah, dutchy, our first inverse/reverse H&S, nice.

But is it?

Is the left shoulder actually dipping below the head? Or, does that spike down have less validity than the steadier, rounder head? Not sure. And does it matter that much? The right shoulder looks like a shoulder. But is the recent move towards/through the neckline invalidating it for the moment. Maybe breaking back up through $6.50 will put it back in the picture. Lots of talk about POU reversing which would fundamentally assist.

If valid, target as indicated, which happens to coincide with some previous resistance. Watch and shoot.

Dutchy3 · 13 July 2008

Hi Kennas

Here's another view. Weekly + volume represented by the width of the candles ...

I see the dominant whites that underpin all the price action on this one for the past six months. The last two weeks are rather indecisive and I might reasonably expect yet another week of this coming ....

I agree that a move through 700 would basically confirm the pattern then a matter of reading the script as it unfolds. Would not like to see a big black this week at any stage and / or a close at 600 as this would demonstrate a bit too much weakness at this stage ...

Wysiwyg · 15 July 2008

Okay, with my limited knowledge of charting this is my interpretation of what is unfolding.(note it`s the psuedo SPI 200 chart)

On the chart I can see that an inverted H&S formed around April/May.I think that the head of the previous H&S may be the shoulder of an even bigger inverted H&S forming.The shoulder and neck have been formed and the head is in the process of being formed now.

This is simply a projection and because it`s projected may not happen.
At least H&S patterns can be defined

Any variations on this???

Sean K · 16 July 2008

Wysiwyg said:
Okay, with my limited knowledge of charting this is my interpretation of what is unfolding.(note it`s the psuedo SPI 200 chart)

On the chart I can see that an inverted H&S formed around April/May.I think that the head of the previous H&S may be the shoulder of an even bigger inverted H&S forming.The shoulder and neck have been formed and the head is in the process of being formed now.

This is simply a projection and because it`s projected may not happen.
At least H&S patterns can be defined

Any variations on this???

Pretty crystal ballish Wysi, we will see. I do hope that head appears soon!

BHP doing it's best to hold close to $40 support, but is struggling. Currently $38.60. Surprised it's held up this well considering Zn and POO overnight. So, short side going ok on this at the moment.

Sean K · 17 July 2008

Dutchy3 said:
Hi Kennas

Here's another view. Weekly + volume represented by the width of the candles ...

I see the dominant whites that underpin all the price action on this one for the past six months. The last two weeks are rather indecisive and I might reasonably expect yet another week of this coming ....

I agree that a move through 700 would basically confirm the pattern then a matter of reading the script as it unfolds. Would not like to see a big black this week at any stage and / or a close at 600 as this would demonstrate a bit too much weakness at this stage ...

H&S still in play for the minute, even though it's been smashed today due to the production shortfall. POU increases could turn it around, or market bear rally. Or, it's still trapped...

Sean K · 21 July 2008

This next one is not a good sight for me.

I'm long BMN.

Would expect $2.00 support to hold, but if not....

Dutchy3 · 21 July 2008

kennas said:
H&S still in play for the minute, even though it's been smashed today due to the production shortfall. POU increases could turn it around, or market bear rally. Or, it's still trapped...

Yes isn't this rally today fasinating .... I'll need to look at the big value movers tonite and see what the volumes are like ... could this be a bit of a line in the sand? Was poised to short QBE on the close today but not going to collapse again today. PDN should be OK still as although it might loose favour to the Banks and top tier miners I can see it being sold off heavily anymore as the current formation has developed ov er the last six months while the rest of the market took so much pain

GreatPig · 21 July 2008

A few more weeklies on my watchlist, not all complete yet so may not eventuate. And WOR is perhaps a bit sus with such a small left shoulder.

GP

MRC & Co · 22 July 2008

That WOW chart is a great example GreatPig.

Even having a crack at that neckline once more, good low risk shorting opportunity right there.

Cheers

GreatPig · 22 July 2008

On the daily chart, WOW has an inverse head and shoulders with a target of around $27, which is pretty much the neck line of the weekly one. Maybe yesterday was as close as it's going to get though.

GP

subaru69 · 24 July 2008

I'm no good at T/A and having some trouble copying the chart across (due to my computer skills) but could someone comment on ASX forming an inverse H&S pattern.

In my approximation the head has just formed, we should see a drop and then consolidation of price. Neck-line should be about 33 as right shoulder will be higher than left. Lowest price was ~29. Which theoretically means a target around 37.

Sean K · 25 July 2008

subaru69 said:
I'm no good at T/A and having some trouble copying the chart across (due to my computer skills) but could someone comment on ASX forming an inverse H&S pattern.

In my approximation the head has just formed, we should see a drop and then consolidation of price. Neck-line should be about 33 as right shoulder will be higher than left. Lowest price was ~29. Which theoretically means a target around 37.

Hmmm, not really in my book subaru. The left shoulder isn't really pronounced enough, and the right shoulder was never forming up. Looks to have broken up now through the 32.5 - 33 resistance.

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