Working Money magazine.  The investors' magazine.
Traders.com Advantage

INDICATORS LIST


LIST OF TOPICS





Article Archive | Search | Subscribe/Renew | Login | Free Trial | Forgot ID?


PRINT THIS ARTICLE

HEAD & SHOULDERS


Precision Drilling's Double Head & Shoulders Pattern

03/18/03 12:06:23 PM
by Gary Grosschadl

This Canadian oil field services company has had a small head and shoulders pattern fuflilled and now may test a much bigger pattern.

Security:   PD.to
Position:   N/A

Precision Drilling's (PD.to) daily chart shows a large head and shoulders topping pattern. Looking carefully in the right shoulder area, I have labelled a smaller head and shoulders pattern that just fulfilled (distance from neckline to head as applied to downside break). Note the higher volume during this decline from right shoulder-- this is consistent with the ideal pattern.

The compelling observation here is that this can eventually lead to a much bigger downside move as witnessed by the much larger head and shoulders pattern developing over the duration of this chart.

Graphic provided by: StockCharts.com.
 
What is likely to occur next is a pause or a brief upleg attempt towards the neckline before the potential bigger downleg occurs. Looking at the oversold stochastics indicator, some kind of bounce can be expected, perhaps shortlived, judging by the negative look of the other displayed indicators.

For aggressive traders, a possible play would be to target a short position once the next upmove falters and the stock reverses again to downside, testing the neckline at around $50 again. The more patient and prudent trader can wait for the trendline test and upon a higher volume failure, can then assume a short position. Use a suitable protective stop-loss to guard against any surprise reversals to upside.



Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.

Website: www.whatsonsale.ca/financial.html
E-mail address: gwg7@sympatico.ca

Click here for more information about our publications!


Comments or Questions? Article Usefulness
5 (most useful)
4
3
2
1 (least useful)

Comments

Date: 03/18/03Rank: 4Comment: 
PRINT THIS ARTICLE





S&C Subscription/Renewal




Request Information From Our Sponsors 

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

PTSK — The Professional Traders' Starter Kit
Home — S&C Magazine | Working Money Magazine | Traders.com Advantage | Online Store | Traders’ Resource
Add a Product to Traders’ Resource | Message Boards | Subscribe/Renew | Free Trial Issue | Article Code | Search

Copyright © 1982–2019 Technical Analysis, Inc. All rights reserved. Read our disclaimer & privacy statement.