thechartpatterntrader
New member
8/5 Commentary: The 60 minute charts continue to bat 1000. We stated that a selloff would occur, back to form a right shoulder, in a Head & Shoulders pattern in the 15 minute timeframe. The move went slightly lower than anticipated but was contained above the prevous minor low of 13,132 that occurred during the panic selloff 3 trading sessions ago.
The Dow's 60 minute chart has positive divergence in place and we anticipate a stealth move higher towards resistance at the 20 day MA. The 20 day MA is now at 13,647, which may provide a good target area for an attempted recovery move. That would allow a right shoulder peak to form in what appears to be a H & S pattern. In the formation of H & S patterns, symmetry is very common. So that if a left shoulder peak forms in the 13,600 area, often a right shoulder will compose in the same price range. Symmetry is not a requirement, but is a normal part of pattern construction. Sometimes H & S patterns are unbalanced having a separate and distinct shoulder construction.
Dr. Alexander Elder, talks about the 'Hound of the Baskervilles' signal in his book 'trading for a living.' In 'the Hound of the Baskervilles,' Sherlock Holmes solves the murder by noting that the family dog didn't bark while the murder took place. Therefore, Holmes deducted that the dog knew the murderer, and that it was an inside job. Dr. Elder contends that if a reliable chart doesn't move in the expected direction, but continues to move in the opposite direction, then one must consider pattern failure. If a right shoulder peak now forms and it continues to move higher testing resistance once again, then the market would have failed to bark once symmetry had occurred. If no reaction (barking) occurs at/near the 13,600 area peaks previously made, then we may very well have 'The Hound of the Baskervilles' signal causing pattern failure. So I wonder if the Dow will attempt to break the record again just like Barry Bonds is doing, matching Hank Aaron's benchmark of 755 home runs. Take a look at the charts posted below. The Dow could allow the SP 500 to regain lost territory for the short term. But the big picture for the long term still looks gloomy. Both the SP 500 and the Dow are large caps.
Dow daily chart:
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=8&dy=0&id=p52357407643&a=113398930
15 minute Dow chart:
http://stockcharts.com/h-sc/ui?s=$INDU&p=15&yr=0&mn=0&dy=9&id=p19135472137&a=113550851
60 minute Dow chart:
http://stockcharts.com/h-sc/ui?s=$INDU&p=60&yr=0&mn=2&dy=0&id=p17682449403&a=109089882
The Dow's 60 minute chart has positive divergence in place and we anticipate a stealth move higher towards resistance at the 20 day MA. The 20 day MA is now at 13,647, which may provide a good target area for an attempted recovery move. That would allow a right shoulder peak to form in what appears to be a H & S pattern. In the formation of H & S patterns, symmetry is very common. So that if a left shoulder peak forms in the 13,600 area, often a right shoulder will compose in the same price range. Symmetry is not a requirement, but is a normal part of pattern construction. Sometimes H & S patterns are unbalanced having a separate and distinct shoulder construction.
Dr. Alexander Elder, talks about the 'Hound of the Baskervilles' signal in his book 'trading for a living.' In 'the Hound of the Baskervilles,' Sherlock Holmes solves the murder by noting that the family dog didn't bark while the murder took place. Therefore, Holmes deducted that the dog knew the murderer, and that it was an inside job. Dr. Elder contends that if a reliable chart doesn't move in the expected direction, but continues to move in the opposite direction, then one must consider pattern failure. If a right shoulder peak now forms and it continues to move higher testing resistance once again, then the market would have failed to bark once symmetry had occurred. If no reaction (barking) occurs at/near the 13,600 area peaks previously made, then we may very well have 'The Hound of the Baskervilles' signal causing pattern failure. So I wonder if the Dow will attempt to break the record again just like Barry Bonds is doing, matching Hank Aaron's benchmark of 755 home runs. Take a look at the charts posted below. The Dow could allow the SP 500 to regain lost territory for the short term. But the big picture for the long term still looks gloomy. Both the SP 500 and the Dow are large caps.
Dow daily chart:
http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=0&mn=8&dy=0&id=p52357407643&a=113398930
15 minute Dow chart:
http://stockcharts.com/h-sc/ui?s=$INDU&p=15&yr=0&mn=0&dy=9&id=p19135472137&a=113550851
60 minute Dow chart:
http://stockcharts.com/h-sc/ui?s=$INDU&p=60&yr=0&mn=2&dy=0&id=p17682449403&a=109089882
