Wednesday, May 26, 2010

Inverse Head and Shoulders Pattern

I am putting my money on the line betting this is an ABC correction. If A was 50 points, we just need to add 50 points to whatever low B has. So if B turns out to be 1055-1065 then end result will be 1105-1115 (coincides with the 200 MA and 34 EMA) which at that time I will be shorting again (I was short the entire day and went long at the close). I think it's important to keep TA in mind, we need at least 4-7 up days and see where the market is at to see if the downtrend is confirmed indeed. I think staying short without any guidelines for profit taking is a recipe for disaster, if unsure stay in cash.

1104 200 MA
1106 34 EMA
1131 13 EMA
1166 50 MA

Trend is still up and the market is oversold. Odds favor a bounce.

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