Oops, shoulda got out my Schabacker (The guy Edwards and McGee plagiarized) and confirmed my terminology before spouting off. I will quote from chapter VI - "Major Continuation Patterns."
"Because the Head and Shoulders Reversal is the first technical formation studied, and because of its distinctive appearance, it is only natural that students should call by that name a certain type of price action which appears with fair frequency in an intermediate relation to the general price trend. This formation is not a true Head and Shoulders for a number of important reasons but we must admit that it is difficult to find a better name for it in view of its superficial resemblance to the Head and Shoulders Reversal. Fortunately, when it is carefully analyzed, the forecast is arrived at in the same way as the forecast from the Head and Shoulders. With the caution, therefore, that the student be careful always to analyze the pattern thoroughly before taking action on it, we shall accept the suggested name and call it the Continuation Head and Shoulders."
Today the Q's decisively took out the neckline of a Continuation Head and Shoulders on the highest volume since late April. (The reverse H&S from March to May is now a failed pattern, if it was ever valid in the first place, since price only spent one day above the neckline.) Today's pattern measures down to the 34 area, which would be right at the April low. SPY looks similar, but measured move would stop short of the late March and early April lows. |
