It was another solid day for the DOW but I'm still trying to keep my positions light. If the right shoulder is to occur, I've got Friday or next Monday as potential turn days. The time between the 2007 high and the 2009 low is equal to the time between the March 2009 low and this Friday.
The time difference between the left shoulder and the head is 68 days or 34 * 2 (both Fibonacci numbers). 68 days from the head to the potential right shoulder is the following Monday. None of those require a market failure, but it does provide a window of opportunity.
I'm looking for some clues to confirm this pattern. Declining volume is the most obvious. Paraphrasing Bollinger on Bollinger Bands, ideally we want to see the right shoulder finish beneath the upper Bollinger Band.
If it's to be a right shoulder, I've labeled key pricing areas for this to occur in cluster resistance. The green line is the prior higher. The blue line is the 62% retracement level. The red line is the left shoulder.
I prefer the two later price areas (blue and red lines).
Why? I like the idea of Mr. Market placing maximum stress via fear and greed on bull and bear investors. If there's one thing I do not like about the current head and shoulders pattern, it's that every bear is trumpeting it as a certainty.
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Hope all is well.