Basis the 1-Minute chart, Friday's Gap Down opening was a breakdown of a Double H&S Top. The white H&S Top forms The Head of the larger H&S Top, in yellow, and is "nested" within that larger pattern.
Frequently, we see Gap Up openings in stocks that result in a "Gap And Crap," where the stock reverses soon after the big opening higher, then goes down and fills most or all of the gap. Those are "common gaps." If the stock is bullish, it will hold somewhere near the gap, even below it, then climb higher. If it isn't, it can go well into the red and also can result in a significant downside reversal.
The same principle applies in reverse with Gap Down openings in stocks that are acting bullish, like GS has been off the early October Bullish Wolfe Wave Fakeout/Breakdown.
Friday's Gap Down in GS quickly reversed to the upside, looking for a retest of the broken neckline and some kind of fill of the two dollar gap down. We can see that the eighth bar ripped to the upside, back to the broken neckline. After a breakdown of a DOUBLE H&S Top, that neckline "should be" resistance. The Bears "should" defend it and send the stock down to a new session low. That isn't what happened.
The Bulls got back inside the broken Double H&S Top, which presented "Ye Olde Knuckle-biter" to The Bears, who managed to slap The Bulls outta there, down to Orange #2, but The Bulls came right back, up to Orange #3, back inside the broken pattern.
I bought 2,000 GS for 114.88, at Orange #4. The Bears weren't getting the job done on the downside, and The Bulls now had established a Symmetrical Triangle (pattern in orange) straddling the broken neckline, an upside breakout of which could launch a rally to the 116.18 - 116.40 gap left in the chart from Thursday's close. 116.18 was the low of the last bar; 116.40 was the close.
The gap-filling rally ensued almost immediately. I was in the trade for about two minutes and sold my 2,000 GS at 116.10 on approach to the 116.18 low of the gap. That worked out quite nicely, so I can refrain from cursing ;)
Just as they did going into Wednesday's close, The Bulls blew right through the 117.53 high of the Double H&S Top and established a new high for the move, at 118.07, where the rally ended in short-term Bear capitulation and Bull exhaustion.
The Bears broke a Descending Triangle (green pattern), then also broke validated support (orange arrow) of a Rising Channel (pattern in orange). When validated support gets broken, that "should have" some significance on the downside, but once again, The Bears didn't defend that broken trendline on a retest. The Bears allowed The Bulls back inside The Channel, willy nilly, as though it never had broken at all.
Sloppy...sloppy...sloppy on the part of The Bears, and since they weren't defending their Channel breakdown, I bought back my 2,000 GS for an average of 115.87 for a scalp. Sold them for 116.16, back inside The Channel.
Friday's rally to 118.07 took GS back to late August horizontal resistance, at 118.10. The Bulls have two closes above the Kumo (Cloud) and lots of room between here and the neckline, near 105.00, for a pullback. Roughly 124.25 is IN PLAY from the Inverse H&S breakout, as long as GS trades above the neckline.
I'm a trader and I don't make predictions. That target is just what the pattern breakout suggests. The picture could change as the chart evolves. If the target does get MADE, I would expect it to occur no later than December 5. Targets generally don't take longer to get MADE than it took for the pattern to form and, usually, they are achieved in less time than that.
Gain: $3,000
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