Yesterday’s action in the indexes left us some clues as to its probable intent as a follow-through. There appears to be a complex Head-and-Shoulders pattern developing with a neckline at 1226. Sure enough, a bounce developed in the pre-market futures, portending a retest of mid-cycle support/resistance at 1243.37 and a right shoulder which completes the pattern.

It appears that we may see a gap up to mid-cycle resistance and a quick turnaround to lower levels. The Head and Shoulders pattern gives us a minimum target of 1175 with a probable bounce back to cycle bottom support/resistance at 1199.62 [round number (1200) support/resistance] or the Broadening Wedge trendline at 1220, at most.

Good luck and good trading!

Regards,

Tony

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Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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