Update 9/8/2011: Dow & S&P Head & Shoulders hit targets

Here’s an update to my earlier trade post regarding head & shoulder patterns on the weekly charts of several Indices. You can read the original article here and you can read the 2nd part here about when the DAX hit its target within a few days.

I also spoke about the Dow Joes 30 and the S&P charts and yesterday they both hit the target I had for them. Lets start with the Dow.

On this weekly chart you can see where price sliced through it’s neckline entry position and then has within a week carried on down to hit its intended target at 10790. From entry at 11990 price has dropped 1200 points in the space of a week!  You can see the trade in more detail on the Daily chart below.

The black vertical line to the left of recent price action was the projection of the head to neckline from the break of neckline. (You know what I mean.) That is what gave us the price projection of 10790.

And now lets look at the S&P. First off the weekly chart. You can clearly see the Head and Shoulders pattern and where it triggered the neckline.

If we move down to the Daily you can see the entry point of 1256.9 (the break of he neckline and the low of the 16/6/2011.

You can see that price proceeded to hurtle down and hit its projected target of 1141. After hitting its projected target price has re-bounded strongly across the Dow, S&P, DAX and FTSE. Is this a reversal point or a dead cat bounce. I have no idea.

Hopefully you’ve been able to see how over these three posts how there are always good opportunities if you’re prepared to be patient and wait for them to play out. I’m always reminded of a great quote by the legendary Jesse Livermore: “After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting.”

Until next time trade well,

FXTrader Paul