Head and Shoulders Pattern Failure

November 30, 2014 · Posted in Failed Chart Patterns, Head and Shoulder, Head and Shoulders · Comments Off on Head and Shoulders Pattern Failure 

Head and Shoulders Pattern failure

H&S Update in After Hours…

December 19, 2012 · Posted in Head and Shoulder, Head and Shoulders · Comments Off on H&S Update in After Hours… 

Here is ES H&S Pattern in after hours and how it worked out

Head and Shoulders Pattern with Market Context

December 19, 2012 · Posted in ABC Bearish, Head and Shoulder, Head and Shoulders · Comments Off on Head and Shoulders Pattern with Market Context 

Head and Shoulders Pattern with Market Context

Market Context is one of the most important concept traders should master before they start trading. Most traders have some concepts of Market Context… If price is above 50 EMA or 200-SMA and price is trading above Pivot or below Pivot etc. But solid understanding of Market Context makes traders confident in trades. Every trade I study and plan, I must clearly know what Market Context I am trading… I trade Price Patterns with Market Context. Market context validates, shows where entries and stops and where to place targets. If Market turns against the trade, I would even have a plan of where my theory fails.

Today afternoon around 1pm, I started seeing a Head and Shoulders Pattern develop in @ES. I started to notice CMI on 5m gave a sell signal about the same time. ES was trading around 1440. I started watching the market price action and wanted to trade below the Neckline of H&S at 1437. Another key element I noticed was today’s Opening Range and the First Hour Low was set at 1437.

This combination of level 1437 (Neckline, First Hour Low around Floor Pivot) gives me a strong H&S trade. I initiated a SHORT trade at 1437 with a STOP of 2.5 pts (1439.5). My Targets were set by measuing Head to Neckline. The fib. ratios of this length below Neckline sets my targets: 1431.5, 1430 and 1428.

About 30 minutes into my trade, ES traded below 1434 and reversed its trend and traded above my Short price. I have 2.5 pts STOP at 1439.5. ES traded at 1438.25 but again it reversed in my Short direction. I knew this time I wanted to close at least part of it around 1434 (+3 pt). Then I kept my next target at 1431.5 and moved my STOP to 1437. (B/E).

By the end of day, my next target was hit at 1431.5 (+5.5 pts) . My previous target gained (+3 pts). I think H&S will work further down overnight and trade below my exits (1431.5).

BarTime wins again!!

December 11, 2012 · Posted in Head and Shoulder, Head and Shoulders · Comments Off on BarTime wins again!! 

Around 11.30 am, I started to notice a potential Head and Shoulders pattern formation with a Head (high) of 1434 and Neckline at 1429. Around 1.10 pm, I saw first sign of Volatility Expansion Bar (RED) in the second shoulder signaling potential bearish trend. This itself is NOT enough for me to trade. I need to check the Bartime and VLTY to confirm it is side-ways trend. I need BarTime Averge to below 150 seconds to trade. But I kinda did not notice ignroed BarTime (which was printing over 200 seconds for 1220 Tick bar), and Shorted the low of the VEXP bar at 1430. BarTime continued to tick above 150 seconds and in next 10 minutes it traded above 1431. I realized BarTime is going to drag my trade further and I exited with a loss of 1 point.

Note to myself: Must check BarTime and VLTY on every trade!!

ABC Patterns in Options

December 6, 2010 · Posted in ABC Bullish, Head and Shoulder, Options · Comments Off on ABC Patterns in Options 

ABC Patterns with Options

ABC Patterns are integral part of many other patterns like Double Tops, Double Bottoms and Head and Shoulders. When I see Inv. Head and Shoulder patterns and its breakouts I plot ABC Patterns and trade using Options. Here is an example of CVS (Caremark Corp.) Daily Chart. This chart shows a clear Inverse Head and Shoulder pattern. Plotting ABC Bullish Setup, it covers from Sept. 2010 to Dec. 2010, trading above EL Level. On Friday Dec. 3rd, it traded above the Neckline to signal a breakout. The distance from the Neckline to the Head is about $6, so the projection from the Breakout level is also $6, targeting around $38. I plotted CVS Feb. $35 Calls in the subgraph. This chart also shows a potential double bottom pattern confirming the validity of Inv. Head and Shoulders in the underlying stock chart. The Feb. 2011 CVS 35 call is trading at $0.50c. Expected target is around $1.10-$1.40.

Head and Shoulder Failure Pattern

December 2, 2010 · Posted in Failed Chart Patterns, Head and Shoulder, Head and Shoulders · Comments Off on Head and Shoulder Failure Pattern 

Head and Shoulder Failure Trade

Today ES (S&P Emini Futures) gapped up about 15 points and by the end of the day closed 25 points up. About 10.15am, ES was showing some signs of initial tiredness and potential pullback. Usually on big rally days, reversal patterns are distinct and occurs over a period of time. Between 9.40am to 10.15am, ES showed a small size Head and Shoulder pattern signaling potential reversal. The neckline was marked at 1199 and the high of the head is at 1203 and high of the right-shoulder is at 1201.25. ES initially traded below the neckline from 10.15am to 10.30am. Then it reversed its trend and started trading above the neckline. When price trades above the neckline, it is a first-sign of failure. The confirmation of Failure occurs when price trades above the second shoulder high. About 11.40am, ES traded above the second shoulder high signaling a confirmation of H&S failure setup. A Long trade was entered at 1201.5. Most pattern failures make powerful moves in the opposite direction. It was evident today as price closed above the Right Shoulder (1201.25) and started to trade a powerful move to 1204.75 (first Target of HS Failure). Target is set the same height as the head to the neckline from the Second Shoulder high. Second Target is at 162% and third target is at 200% of the height above the second shoulder high. Targets are marked on the chart to show how the trade progress.

$SPX Head and Shoulder Pattern (Update3)

June 29, 2010 · Posted in Head and Shoulder, Head and Shoulders · Comments Off on $SPX Head and Shoulder Pattern (Update3) 

$SPX reversed its uptrend from 50% level (1131) and today it is trading near its neckline (1041). The second-shoulder is very narrow as price action is quick and quite volatile. A breakdown occurs when 2-Bars with lower-low close below neckline. H&S targets based on the height of H&S pattern are set at 1000, 932 and 865 level. A reversal of H&S is not considered until price trades for 2-3 bars above Neckline with Higher-High Closes. In this case, I would look for close above 1100 level on the upside for a reversal. Until then it is H&S pattern. H&S Pattern failure occurs when price trades above the high of the second shoulder.

$SPX in Head and Shoulder Pattern?

June 2, 2010 · Posted in Head and Shoulder, Uncategorized · 1 Comment 

S&P500 index is showing signs of positive momentum as it builds a Head & Shoulder pattern. From Oct. 2009 to Feb. 2010, $SPX formed its left-shoulder between 1050 and 1150. The Head part of H&S emerged from Feb. 2010 to May 2010 (1050 to 1200). S&P retraced to its neckline 1050 during the recent May sell-off. On Wednesday (June 02), S&P rallied over 27 points to close at 1098. This rally may be signaling positive momentum and upward direction for next two to three weeks. The height of the left shoulder is around 100 points and the peak of the Left shoulder level is near 1150. This area (1150) may act as resistance for the current rally. After the right shoulder completion, S&P may rollover towards the neckline. A retest/break below the neckline (around 1050) would signal completion of Head and Shoulder pattern. If H&S pattern materializes, the lower targets for the S&P is around 900.