GS: Inverse H&S Fractal

This is the hourly chart from Wednesday's close. The Bullish Inverse H&S is dominating the chart, so let's review what we were looking for in yesterday's session:

"In the Hourly Chart, despite the poor earnings, The Bulls have a chance at more upside if they can defend the neckline of this Inverse H&S pattern, the upside breakout of which helped to propel GS to the Wolfe Wave target. It currently comes in just below 100.00 and is declining a bit each hour.

Any trading below that neckline is "Ye Olde Knuckle-biter" for The Bulls, calling the bullishness of the pattern into question. Anything below the 94.52 low of the Right Shoulder would call the bullishness of the pattern into serious question. Right Shoulder lows "shouldn't" get taken down."



GS opened on a "Gap And Crap" and immediately broke below the neckline of the Inverse H&S, which was just below 100.00, handing The Bulls "Ye Olde Knuckle-biter."

A Descending Triangle formed (pattern in white), which straddled the neckline, going above and below the neckline in the Hourly chart (first chart, above). That pattern resolved to the downside, sending GS deeper below the neckline. Not good for The Bulls.

The Bulls then put in a little Double Bottom (in yellow), broke out of it to the upside, then formed a Symmetrical Triangle (in orange) in an attempt to establish a second bullish pattern breakout. They weren't successful. The Bears broke the Symmetrical Triangle to the downside AND they took out the lows of the Double Bottom (in yellow), sending GS to a new session low. The Bulls had to start all over again. UGH.

The Bulls formed a little Rectangle (in green), but the problem with that little pattern is that if it were to break out to the upside, The Bulls had to rally into IMMEDIATE resistance from the broken Symmetrical Triangle and the broken Double Bottom. I wasn't interested in getting long a rally smack into resistance if The Bulls could break it out, but continued to follow the action.





The Bulls temporized for a bit longer, within The Rectangle, then broke it out. I liked that. "The bigger the base...the better the breakout." That wasn't a large base, but it was broader than where it was in the last chart, encouraging The Bulls who were trapped in the broken Symmetrical Triange and the broken Double Bottom NOT to sell when they got whole on the rally. The Rectangle breakout put a target of 99.26 IN PLAY. If The Bulls could get there, that would be "some" evidence that the low was in and that The Bulls were ready to do something on the upside.

Math for The Rectangle target:

98.78 - Identical highs of the pattern
98.30 - The more conservative of the 99.30 and 99.28 lows

98.78 - 98.30 = 0.48 points of upside on a breakout above 98.78.

98.78 + 0.48 = Target: 99.26 IN PLAY

The Bulls rallied to 99.248, just over a penny shy of the target, then pulled back for a retest of the top of The Rectangle. I liked that. I bought 2,000 shares of GS for 98.78 on the retest, which is an example of what is meant when we hear, "Pick your spot," or, "Let the trade come to you." Buying retests of upside breakouts and shorting retests of broken patterns are nice entries into a stock. We find out very quickly if it's going to be successful, or not, and if we're going to get into "Ye Olde Knuckle-biter" (back below the breakout), or an outright failure.



WHOA! The Bulls formed a Symmetrical Triangle (in yellow) after the successful retest of the top of The Rectangle, then broke out of it. We know that nested patterns and multiple pattern breakouts can pack some punch, so I was expecting a rally, but not tha-at much of a rally so quickly. GIMME THE MONEY and a minute or three to figger that one out!! LOL.

It didn't take long for me to say, "Oh-h, geez..."



(1) The failed Double Bottom, (2) the failed Symmetrical Triangle,(3) the Rectangle, and (4) the second Symmetrical Triangle all had "morphed" (changed) into a Bullish Inverse H&S pattern, a "fractal" of the large one in the Hourly Chart (first chart above)!

"Fractal" simply means a repeating pattern, or repeating behavior. The word was invented so that we can go round cocktail parties saying it, giving everyone the impression that we've got half a brain when we know that we really haven't. Say "fractal behavior" to people with whom you particularly don't wish to have intercourse. They'll flee your side in short order, in recognition of the fact that you've trumped them in the "boring conversation" department ;)

I wanted my 2,000 shares of GS back on a retest of the neckline, but didn't get it. The pullback was shallow, then she had another leg up.



The Inverse H&S target of 100.27 got MADE, and then some.



I also wanted my 2,000 shares back, at 100.43, on a retest of the late afternoon Falling Wedge breakout. I didn't get that one either. The pullback was only to 100.46. The Falling Wedge target of 101.55 got MADE. Without me. Curses!



This is the Hourly chart again, updated to include Thursday's trading. The Bulls had to endure "Ye Olde Knuckle-biter" for a bit, but managed to close the session out back above the neckline on the strength of the Bullish Inverse H&S fractal in yesterday's intraday chart.



Gain: $1,700