Inverse Head and Shoulders Setup Emerges
Until the 50-day moving average is reclaimed, followed by a recovery of the prior swing high, downward pressure remains and could result in another test of recent support. Nonetheless, there is also the potential for a small bullish inverse head and shoulders pattern to develop. The pullback from Tuesday’s high of $370.89 completed a 61.8% Fibonacci retracement of the prior advance, with a low of $348.66 reached Thursday. The pullback has also tested support near the downtrend line, which previously represented dynamic resistance.
If Thursday’s low is retained, followed by a rise above Thursday’s high of $356.73, a one-day bullish reversal will trigger from the confluence of trendline and Fibonacci support, while a new higher swing low will also be established. That would create a second shoulder of a potential inverse head and shoulders bullish reversal pattern, with a breakout above the neckline at $370.89 confirming the pattern.
Further, although a decline below $348.66 would lead to a deeper pullback, the inverse head and shoulders pattern would remain valid provided a higher swing low is subsequently established above the left shoulder low at $343.63. Whether the stock confirms that pattern or instead extends the correction will likely determine the next significant move, making the developing support zone important to monitor.
Source: Original Article
