The DJIA Head Shoulders Top?

Top H & S is a classic model of the stock price and is quite confident in their ability to predict a trend reversal or correction and the level at which the correction will be extended.

The pattern consists of three elements: a right and left shoulder separated by a new high, which is the head of the pattern. Volume must be increased in the setting of the left shoulder over the development of the head, and a significant reduction in the development of the right shoulder.

The base of the top M & S, called the neckline is the line connecting the center pulled back from shoulder upper left and lower back pull the head. The subsequent retreat of the right shoulder should break the neckline designed and move lower. Often after this break with the neckline, prices will reverse and go higher to test the neckline as resistance that was previously supported. This is an important test and if successful, is an important opportunity for risk, low selling short the index.

In addition, the vertical distance between the top of the head to the neckline, when projected below the neckline, gives the low projected decline. Blue notation notation Elliott wave analysis / Fibonacci. The study of the final oscillator suggests that the current level of the Dow Jones is the limit of most sold territory. However, this oscillator invariably creates a significant discrepancy between the heights of price and low and high and low oscillator, respectively. This strongly suggests that the small DJIA today probably less weak interim price only correct to move lower again. At the time of the next big medium-term lower, we may see a significant positive divergence between the oscillator and the DJIA. So over the next two to three weeks, it is likely to see the DJIA down lower and lower altitudes, as it made its way to the lower projected area of ​​8160.00.

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