Talk about a Head and Shoulders formation - Apple

[themickey]

Here is a h & s pattern which just failed.
Notice too that support also just failed then backfired.
Mate, seriously, conventional TA patterns may have once worked but increasingly they are failing.
Get used to it and dump these stupid old TA beliefs if you wish to grow your trading.
Every man & his dog knows about conventional TA theory, do you think these theories are not being exploited, no wonder ET traders find it hard to make a buck with these ingrained traditions locked into the psych.
https://www.barchart.com/stocks/quotes/MIN.AX/technical-chart

 

[TrustyJules]

I think this is very much the point - it ticked all the classic boxes for h/s and yet fail.

 

[ironchef]

Here is a h & s pattern which just failed.
Notice too that support also just failed then backfired.
Mate, seriously, conventional TA patterns may have once worked but increasingly they are failing.
Get used to it and dump these stupid old TA beliefs if you wish to grow your trading.
Every man & his dog knows about conventional TA theory, do you think these theories are not being exploited, no wonder ET traders find it hard to make a buck with these ingrained traditions locked into the psych.
https://www.barchart.com/stocks/quotes/MIN.AX/technical-chart

Good comments sir.

After trying out various TA, etc. and after reading many threads on TA and books on TA, I am still not able to reliably make use of them. Perhaps you are right, too popular so they lose their effectiveness.

 

[themickey]

Good comments sir.

After trying out various TA, etc. and after reading many threads on TA and books on TA, I am still not able to reliably make use of them. Perhaps you are right, too popular so they lose their effectiveness.

Not only too popular but possibly the following explanation.
A long time ago people were more religous and superstitious and gullible and ignorant.
Early proponents believed in cycles and we had Gann (scam) which many adherents swore by. There was for example the Masonic Lodge which believed all sorts of superstitious numbers, angles and lunar influences. TA indicators I believe is an extension of a belief that using maths you could plot the next moves, hence for example, if RSI is greater than 70 sell and less than 30 buy, or Stochastic, when STO peaks it will then go down again so trade the cycles.
Further, if you were to use MACD, with one magic combination of numbers 12, 26, 9 for example, you will quickly trade yourself to riches.
The computer with it computational power along with the web has exploded this practice, here is some garbage toted: https://stockcharts.com/articles/tradingplaces/2015/07/macd-trading-secrets.html
Noob traders are lazy and want for a quick fix, by using indicators they can outsmart everyone nearly because "gee whizz, I'm more clever than most and will cream it in".
After being frizzled and burnt numerous times they soon wake up, but that often takes years as humility is not a common trait in young adults.

 

[learner2007]

I think this is very much the point - it ticked all the classic boxes for h/s and yet fail.

Since your first post in this thread I've held back from commenting as I usually don't do so regarding someone's analysis. However, and please don't take offense by this, I so strongly believe that calling that move a H&S, is so far out on the limb that you are just seeing what is not there. And given the fact that you said

I only posted the chart because in my experience this is one of the clearest H/S patterns I ever saw.

I thought to attach a few examples for you to compare your's with. True, a pattern need not be picture perfect. But those I attached are far from rare and I think you will agree that they are quite clear.
If you are new to TA, please keep in mind that the farther the pattern is from the textbook version, the less likely it is that it will workout. That is one of the biggest pitfalls in using TA. The trader sees what is not there. You, as so many do, are just connecting two small points in an upward and downward move to create a neckline. Remember that most patterns are compact, as the change in supply and demand is a concentrated process. Additionally, keep in mind that a H&S is a rectangle with a false breakout. That should help you see it more clearly

And as so many say, everybody sees the pattern differently. But if it's real, it will be clear and leave no doubt.

I attached No.1 because someone is going to come back and say that TA can only work in hindsight. But with the pattern now being on the RS, the trader can prepare to enter sometime after the pattern has been completed.. So no hindsight required.

 

[TrustyJules]

Dont worry I am not offended - its a shame you did not react straight away. I posted at the time I did exactly because it was ahead of an outcome so it didnt involve hindsight "cheating". Being wrong is part of investing and if I got miffed every time a trade went south I'd be a pretty sour person. Understanding what - if anything - you did wrong is good practice.

I certainly don't want to call myself a TA expert although I have probably been reading and using it for longer than most people. Now I have set out rather clearly why I termed that formation an H/S - I do see you disagree with me and go so far as saying I am out on a limb. You say the pattern is not compact enough but not much else would you mind elaborating? I appreciate the other charts but they dont tell me much unless you explain what makes them so different to the Apple one.

 

[learner2007]

You say the pattern is not compact enough but not much else would you mind elaborating? I appreciate the other charts but they dont tell me much unless you explain what makes them so different to the Apple one

No, I didn't say your pattern is not 'compact enough', I said 'most patterns are compact'. If the difference between your pattern and the examples I sent does not hit you like something jumping out of a 3D movie, I would have to start from square one, and that would open a can of worms. But if what you've been doing is working for you, stick with it by all means, and please disregard what I said.

 

[TrustyJules]

Actually there was a time I invested considerable time and interest in T/A variants. I then consulted
The Encyclopedia Of Technical Market Indicators by Colby.

This made me a lot more sceptical about the validity of t/a which I am sure is a can of worms. For sure though most patterns or t/a methods must be explainable in if not short then simple words that can be followed to verify and duplicate the work. Failing that its nothing more than gut feeling or seeing patterns where there is in fact chaos. Mankind's great strength is its ability to look for patterns but we can exaggerate this innate capability as well.

I think it was Jeff Augen that presented an anonymised pattern of the Kellog stock and a stock pattern generated by a 'Random walk in the park' type software. Both look as much like stock patterns as you might want and technical analysts confronted with them would let loose their theories on both of them. Of course one pattern might actually be submitted to analysis whereas the other was totally random.