March 20, 2009
CBA Forming Inverted Head and Shoulder Pattern
By Planet Wealth
CBA has started to show some strength of late with a bearish reversal pattern on the weekly/daily chart. Just as a Head and Shoulder(H&S) pattern is a reversal for a down trend about to start, an Inverted H&S is a reversal for an up trend about to start.
CBA has currently met the resistance of the neckline of a possible Inverted H&S. If the resistance is too strong, and the stock retreats, the pattern has failed and the overall long term downtrend stays in place. Should there be a breach of the neckline, a confirmation of the Inverted H&S has taken place and projections of a likely target can be made.
To make a H&S project, measure from the tip of the head to the neckline, the take that distance and measure the same from the breach of the neckline. This becomes the likely price target. With a medium term view, CBA will have a target of around $38.50. Not only is this point the target projection but also an intersection of a major weekly resistance and the 12month downtrend, where we could expect a high possibility of a rebound.
But this would not mean the stock is bullish overall. A significant break above the 12 month trend line to make a Major Higher Peak would an indication the buyers are back in control.
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Topics: Technical Analysis, trading patterns, Uncategorized | No Comments »
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