November 17, 2008
Weekly Wrap – Head and Shoulders Pattern
By Planet Wealth
After another down week on the XAO, it has produced a potential Inverted Head and Shoulders (INH&S) Pattern.
There are two possible scenarios that we could see this week. First would be a continuation of the small term down trend that started last week. If the XAO continues with a negative sentiment this week we could see it hit at least the previous lower trough of 3700.
The second scenario is that it bounces back this week with a positive sentiment, which will be what makes the left shoulder of the INH&S. Should there be a rally this week we could see it reach the neckline at 4300. A breach of the neckline will be a confirmation of the pattern and see the XAO run the same distance of the tip of the head to neckline which is a target of 4800. Supporting the formation of the left shoulder is the indicators on the weekly which are all showing very bullish signals for the small term.
(click on image to enlarge)
XAO Head and Shoulders
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