ugly head and shoulder on the SMH
- Thread starter Warrior4g
- Start date
It's there. But be careful to make sure it breaks through, or have a contingency plan before getting greedy. The fact that it's so obvious should bring caution.
Sometimes H&S' (like any other pattern) just morph into another wave in the sea of patterns
(like channel continuation, broad triangle, etc.. on QQQQs).
<img src="http://elitetrader.com/vb/attachment.php?s=&postid=1603936" border="0" alt=""><br /></font></p></font></p>
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"Patterns are the fool's gold of financial markets... They are the inevitable consequence of the human need to find patterns in the patternless." Mandelbrot
Sometimes H&S' (like any other pattern) just morph into another wave in the sea of patterns
(like channel continuation, broad triangle, etc.. on QQQQs).
<img src="http://elitetrader.com/vb/attachment.php?s=&postid=1603936" border="0" alt=""><br /></font></p></font></p>
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"Patterns are the fool's gold of financial markets... They are the inevitable consequence of the human need to find patterns in the patternless." Mandelbrot
you can get many patterns from a chart as you want, just like looking at those moving clouds in a sunny day, you will name this cloud as " a sheep", that cloud as "a butterhead", or after a while, the same cloud may be explained as "an angel",or your friend may call that same cloud as "an flower", ......
it is human nature: try to name those charts as what what..., actually they mean nothing.
it is human nature: try to name those charts as what what..., actually they mean nothing.
dtrader98
"Patterns are the fool's gold of financial markets... They are the inevitable consequence of the human need to find patterns in the patternless." Mandelbrot
exactly, that is why people feel strange why I do not need charts to do trading, chart actually distracts attention. if you relay on charts, you will end up being a chart pattern specialist (not a trader), when you want to make a trade, you will hesitate "mmm, let's check the chart...", it seems getting the right chart pattern is more important than trading in the right market side.
"Patterns are the fool's gold of financial markets... They are the inevitable consequence of the human need to find patterns in the patternless." Mandelbrot
exactly, that is why people feel strange why I do not need charts to do trading, chart actually distracts attention. if you relay on charts, you will end up being a chart pattern specialist (not a trader), when you want to make a trade, you will hesitate "mmm, let's check the chart...", it seems getting the right chart pattern is more important than trading in the right market side.
I have never had much luck with chart patterns, but I still think charts are very good trading tools. I find that support and resistance lines are fairly high percentage bets for entry and exit points.
Notice how well the former resistance line became a support line after the breakout in April. The 200-day moving average is also frequently a support or resistance line.
With this chart action a trade could be to short now with a target to close out at $36. If it breaks out above the descending trend line, then close out the position with a loss. A higher percentage play is wait to see if SMH continues to fall then place a buy limit order at $35.5 to $36 and play the bounce up on the long side. In either case I would only be looking to make $1 in a few trading days.
I doubt the doomsday head and shoulders pattern will play out. INTC makes up a big part of SMH and I think INTC's chart is more bullish than bearish.
Notice how well the former resistance line became a support line after the breakout in April. The 200-day moving average is also frequently a support or resistance line.
With this chart action a trade could be to short now with a target to close out at $36. If it breaks out above the descending trend line, then close out the position with a loss. A higher percentage play is wait to see if SMH continues to fall then place a buy limit order at $35.5 to $36 and play the bounce up on the long side. In either case I would only be looking to make $1 in a few trading days.
I doubt the doomsday head and shoulders pattern will play out. INTC makes up a big part of SMH and I think INTC's chart is more bullish than bearish.