Fibonacci Financial

Posts Tagged ‘Head and Shoulders Top’

Remember the my blog post on June 29th?

In “If Bonzo Is Buying Then You Should Be Selling” we learned about how to identify a Head and Shoulders Top. So did the DJIA complete a Head and Shoulders Top yesterday?

Well let’s go through the checklist:

1.  Did the Dow have a strong rally leading into the distribution formation?   Yes!

2.  Did Dow form a head and shoulders top with declining volume on each peak?  Yes!

3.  Did the Dow break the neckline of a Head and Shoulders Top formation by 3%?   ???

Hint: that would require a close of about 250 points below the 8200 neckline – or below 7950.

The Answer is NO because the Dow closed at 8150 – close but NO CIGAR – YET……..

To be continued.  Remember how Bonzo is investing!  Stay tuned 

AGAIN

There are a wide variety of ways to participate in this opportunity ranging from the very conservative to the highly speculative.

BUT you need active guidance – Contact Us at Fibonacci Financial.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

How do we know when

to go against Bonzo (aka: the crowd)

and be a Contrarian Investor?

The Dow Jones Industrial Average is currently providing us with a classic case to use as a teaching tool. 

The Dow is telling us that it most likely will go DOWN.  It is signaling this with a technical formation called a “Head and Shoulders Top“

Before you look at the current Dow chart please read from the classic description in Edward’s and Magee’s Technical Analysis of Stock Trends.  Start with the paragraph below the titled – The Head-and-Shoulders.

Ok, now  please  read one more page and review the sample chart. 

And now the Dow

And how do we know

that the Dow will probably break through the neckline

and enter an intermediate size decline?

WE can get a pretty good idea from the current message being telegraphed to us from the Dow Bullish Percentage Index (aka BPI).

As can be seen on the above chart the Dow has been selling in overbought territory for almost a month.

Watch for a breach of the 8200 Dow level.  If the Dow penetrates the neckline at the 8200 level it will decline much further.

There are a wide variety of ways to participate in this opportunity ranging from the very conservative to the highly speculative.

BUT you need active guidance – Contact Us at Fibonacci Financial.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.