Classically, this possible H&S Top has three things wrong with it, technically:
1. The Right Shoulder is wider than the Left Shoulder. It should be narrower.
2. The high of the Right Shoulder is higher than the high of the Left Shoulder. It should be lower.
3. The volume during the pattern was highest on the move into the Right Shoulder. The volume in the Right Shoulder should be the lowest in the Right Shoulder.
That said, my feeling is that "if it walks like a duck ... quacks like a duck ... chances are, it's a duck!" LOL.
For example ...
This H&S Top in Yamana Gold (AUY) in 2008 was "a duck," even though it was all wrong, classically.
1. The Right Shoulder was wider than the Left Shoulder. It should have been narrower.
2. The high of the Right Shoulder was higher than the high of the Left Shoulder. It should have been lower.
3. Volume during the formation was highest in The Head. It should have been highest in the formation of the Left Shoulder.
Despite those imperfections, the neckline broke in the mid-14s, and the H&S Top target of 4.73, which "seemed" a bit ridiculous at the time, got MADE.
Regarding the GLD in the current time-frame, H&S Top or not, it's at least broken the horizontal trendline (neckline?), and has fallen below the Kumo (Cloud) support in the Ichimoku Kinko Hyo chart, the bottom of which comes in at 88.93. The Kumo (Cloud) is represented by the vertical lines, and it now is overhead resistance.
I would need to see the GLD get back above the broken trendline and CLOSE back above the bottom of the Kumo (Cloud), currently at 88.93, in order to rate it a "neutral." If the GLD can do better than that...
... we could have a Bullish Falling Wedge, rather than the H&S Top, if the GLD can take out the top of the pattern, currently in the mid-91's.
The broken H&S Top in the 34 thru 144 RSIs, though, is suggesting that the GLD will have a tough job of it, getting through resistance from here to the mid-91s - mid-92s.
The RSIs are improperly positioned (bearish) with the 34 below the 55 ... the 55 below the 89, etc. On any rally in the GLD, the RSIs will rally into Bearish Synchronicity at/near the broken neckline of the H&S Top. They will need to "Go Go Go" to get back above the neckline, and get bullishly positioned again. Possible, of course, but that's going to require some muscle.
3 comments:
Would the target for the H&S break on GLD be 70?! And when would you know if the H&S scenario is wrong? Finally, I really enjoy your style of technical analysis. Where did you learn it? Thanks again.
ghamal,
Thank you. I pretty much am self-taught after learning the basics about patterns and the indicators, like MACD, RSI, etc. My metastock program supplies a lot of that information.
I'll answer your GLD questions in this morning's post. Thanks.
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