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SPX 500 Head-and-Shoulders, Break or Fake?

SPX 500 Head-and-Shoulders, Break or Fake?

Paul Robinson, Strategist

Talking Points:

  • SPX500 head-and-shoulders pattern receiving a lot of attention in the media
  • Being careful not to anticipate the break, a different pattern could emerge
  • IF a break occurs, last October lows likely to be tested

Currently, there are a lot of eyes on the head-and-shoulders pattern in the S&P 500, which is generally regarded as a red flag. It plays to the notion that popular opinion is generally the wrong one. This does not mean it won’t play out as ‘expected’. The textbook way to play H&S formations is to wait for a confirmed break of the neckline (1975 in this case); the conservative way is to wait for a break and retest of the neckline before taking entry. Target set near October lows between 1819 & 1860. IF we do not see a break in the neckline, a triangle formation could be in development, meaning more time before a material move occurs.

SPX500 4-HR: Oct ’14 – Present

SPX 500 Head-and-Shoulders, Break or Fake?

--- Written by Paul Robinson, DailyFX Research

To contact Paul, you can email him at instructor@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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