Potential Head And Shoulders
In today’s chart I have drawn the Head And Shoulders structure that could potentially form. The upper blue dotted line is the neckline which holds up the left shoulder, the head and the right shoulder. The pointed arrow on the left measures the height of the head above the neckline. This is reproduced on the right which measures the depth of the fall at the anticipated point at which the STI will cross below the neckline. This predicts that the STI will drop to 2100 or lower.
I should emphasise that the Head And Shoulders structure has not been completely formed yet. The STI has to drop below the neckline to complete the structure. Today the STI closed near the intraday high, which means that it is likely to go higher next week. Hopefully it will continue upwards and escape the dreadful H&S structure. In Technical Analysis, a H&S structure has very high probability of plunging down to a depth which is about the same as the height of the head.