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Strategies & Market Trends : Technical analysis for shorts & longs
SPY 683.21+0.2%Jan 2 4:00 PM EST
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To: Robert G. Harrell who wrote (35781)1/5/2002 3:17:26 PM
From: Johnny Canuck   of 69407
 
Hi Robert,

>>My question to you or anyone who really knows T/A is does
>>a reverse head and shoulders have a positive implication
>>if it is on top of a long up trend?

That is an interesting question, I don't think I have ever seen a statistical study on the issue.

I would say this though, pattern typical fall into two categories:

1) Consolidation of Continuation Patterns
2) Reversal Patterns

As a reverse head and shoulders is a reversal pattern, I would say that a reverse head and shoulder within the context of a up trend would have little significance as the trend is already up.

Definition of a head and shoulder:

iqchart.com

Terms of reference on patterns:

recognia.com

Keep in mind that most people anticipate the completion of the right shoulder though and as a result get whipsawed out. The other issue is that most people don't allow enough of a time period to elapse for the head and shoulder to form before labelling it a head and shoulder. Remember that the pattern is a reflection of the thinking of the market participants, a change in psyschology take time to form. It is not something that normally happens over a few days.

Patterns are not really my area of expertise. I am not sure who is left on SI who is a good pattern reader. Keep in mind there is still a great deal of art to reading a pattern as one person's head and shoulder is another person's ascending triangle.
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