$SPX Head and Shoulder Pattern (Update3)
June 29, 2010 5:32 PM

$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.

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