Head and Shoulders -> brain seeing what it wants to see?

H&s are great only if you understand market behavior.. Most of the charts you post above look like counter trend trades.. I don't think that will work well in the long run.. Good luck
 
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Good feedback all, thanks.
I've been inspired to set Python to the task of identifying possible H&S, and then perhaps manually confirming the patterns (without knowing in advance the outcome).

I'll try and track down some of those books / articles too. Thanks
 
Yeah I'd say cognitive bias is not a terrible place to start in devising some trading strategy.

Anyway, back to voodoo TA :)

Is this an inverse head and shoulders in progress? ticker COG

cog.png
 
We seldom see what we're not looking for and sometimes force compliance when less than ideal occurrences are found.
 
I think TA really needs to be allied with quantitative evidence. And with python / R, and whatever else, it's certainly possible to gather up hundreds or thousands of qualifying instances of H&S. Only then would I narrow down to the details of when to enter.

Anyway, I've skimmed through some charts again and my watch list has grown:

Currently intrigued by:
COG
OII
MSFT

And as of this evening...
NB: I hope you'll appreciate since I've only just started investigating H&S I'm being VERY relaxed in terms of what I flag up as possible pattern in progress. I will provide updates on how these play out over the next couple of weeks for anyone who is also interested.

LLY...
lly.png


MOS...
mos.png


NE...
NE.png


OI...
oi.png


SLB...
slb.png


PFG...
pfg.png


THC...
thc.png


UHS...
UHS.png


XOM...
XOM.png
 
HarryHindsight,

You said...

I think TA really needs to be allied with quantitative evidence. And with python / R, and whatever else

Have you done such ? If not, why not so that you can move from the analysis phase into the trading phase of those types of H&S price actions.
 
HarryHindsight said:
https://www.scribd.com/doc/97919786/Harvard-Study-on-H-S-Patterns
For whatever that may be worth.
More...

From the abstract: "We identify head-and-shoulders patterns using an objective, computer-implemented algorithm based on criteria in published technical analysis manuals" I stopped right there. It is clear they have no idead of what is going on. Lots of people fight whether this or that pattern is a h&s.

What could it possible worth? Absolutely nothing IMO. Here is what the same author wrote in another paper a few years earlier:

"Head and shoulders patterns qualify as noise because the associated trading strategy is unprofitable"

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=938807

Using a h&s to trade is like going to a modern war with a bow arrow.
 
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