The Nasdaq (COMPQX) has been saved today as it has almost completed a 4 months broadening top. Both the Nasdaq and Russell 2000 have a similar top. But recently the nasdaq has been the weaker index. A close below 3968, implies a target of 3,580.
Part 1 of this post was back in June here, where I pointed out that for the third time in a row IYW formed a H&S Top. Target was achieved with a clean breakdown and no pullbacks. Currently, a smaller than usual 3-week H&S Top is forming for the FOURTH time! Neck at 77.50 and initial target is 75.60. Risk to reward ratio may not be that great though, but you never know maybe this will be a minor reversal top that starts a major bear trend.
Do you believe in the statement “History repeats itself”? You probably do if you trade through technical analysis so lets look back at history.
As shown in the chart below, between Feb and May 2012 A Head & Shoulders Top formed broke down and a 8% drop followed.
Going forward a very similar H&S Top formed between Aug and Oct 2012 which broke and a 12% drop followed
Fast forward June 14th, 2013 guess what pattern formed this time? Yes!! its the Head & Shoulder Top that did not break……yet
Right now you are definitely wondering what is the mystery chart?
JOIN Me here again tomorrow Monday one hour before the market opens and I will tell you for FREE
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