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FTSE - Inverted Head and Shoulders

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Is the FTSE showing an inverted h&s pattern on the weekly. If it is and it's broken the neck line of that, what is the likely target?

FTSE 100_20190318_19.09.png

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@Nelsy-Boy,  the target is the same as for double tops etc, a measured move meaning an equidistant move (in the opposite direction) to that of the neckline to the head.

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45 minutes ago, Nelsy-Boy said:

Thanks @Caseynotes. Can you please advise if the line I have drawn is the neckline.

@Nelsy-Boy,  two schools of thought on that one. Some say the neckline should be drawn horizontal while others say you should use the use the 2 points of the base of the neck and if they are at an angle so be it. Take your pick.

An important point though is that though technical analysis might sound technical it's really nothing more than a guessing game. Price does not subscribe to TA. Price will do it's own thing no matter what lines are drawn on the chart which is why technicians don't make good traders. TA is for basic reference only.


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Thank you and nicely put.

Price will not merely adhere to Elliot Wave Theory or play by the rules of support and resistance. The price will move and it is up to traders to try and select the correct direction of the price movement. I accept this is very simplistic but it is about trading in the same direction the price is. This is one of the reasons why I favour trend following over very complex and theoretical technical analysis with lines, charts, jargon, more lines and charts, etc. 

The more complex you make trading then the more difficult it becomes to make trading decisions. You then just merely end up doing hours and days of analysis without actually trading. This is where a trading system is so important. Sometimes over kill on technical analysis can convince you not to trade something that you should trade. For me the most important indicator is the price action. That is what I use the most and spend the most time analysing. 

A lot of traders can hide behind complex technical analysis and end up doing very little trading. If you identify the strongest trends then technical analysis should support your trading decision on whether to trade or not at that specific moment in time. Trend identification is key. Technical analysis can then be used to aid decision making. 

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@Caseynotes thanks for your insight again and appreciate your comments on price action along with @TrendFollower. I have read a lot about these patterns becoming self fulfilling, in that so many traders recognise them and they all, on this occasion, buy the index. I have certainly tried to cut down on indicators and lines on the chart because I have put myself off from dealing due to conflicting signals. I mentioned divergence in a previous thread that you helped me with. I’ll keep learning and will put questions on the community as and when they come up.

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@Nelsy-Boy & @TrendFollower,  you are right Nelsy that patterns can be weighted above indicators and that there is a degree of self fulfilling prophesy to them and that too many indicators will lead to analysis paralysis.

If you have seen any of my charts you will note I tend to stick to simple support and resistance, this is because it is one of the few indicators that is real and observable on the charts that signal boundaries. They are potential battle lines and I like to watch battles from the sidelines and be ready to get up and follow the winner as they march towards the next battle line. Keeping it simple.  

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@Nelsy-Boy & @Caseynotes,

I agree with the self fulfilling prophesy part. At times traders can conduct over analysis and try and be too clever and technical. If those traders who conducts lots of technical analysis cannot demonstrate a superior level of profit performance over someone who does not conduct as much technical analysis over the same period of time then what is the point?

Excellent traders are those who consistently make more profits over a year than losses. The bigger the gap between the profits they make and their losses the better. Every trader will make losses. One must learn to embrace them and keep them as low as possible and to a minimum but we all will make them.

It is not about having more successful trades than losing trades. What is the point of being successful on 80% of your trades if the losses are greater than your profits because of the 20% of the losing trades where the losses were so big they were greater than your profits on the 80% of the trades.

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