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Head and Shoulders
Note: the chart uses
OTC: DJACF, same company
OK, let’s start this off by applying some Head and Shoulders to the scalp. There is nothing annoying than having to deal with that flaky white stuff that comes off your hear head, especially when you are wearing black and are suppose to be client facing. Oh, shoot. Wrong head and shoulders. However, the head and shoulders you might come across on a chart can be equally annoying, especially when you might have been looking to add more of a particular stock.
What’s a head and shoulder chart formation exactly? It starts with an initial upwards spike in prices that reside some and then spikes again at a higher peak before residing once more, then followed by another spike about as high as the first one before residing once more. At the bottom of these spikes (the head and shoulders formation) there is an area of support known as the neckline, but once that breaks the chart becomes bearish. I should point out that the area of support on a head and shoulders formation is not typically as strong as other areas of support we have pointed out in previous editions. This would largely be in part due to other people seeing the bearish charting setup and looking to exit the stock.
In the chart to the right, I have illustrated what a typical Head and shoulders look like. Note, this ticker is not a cannabis-related stock (it’s a lithium ETF that I recently tweeted out before the prices plunged) but none the less the principles are all the same. I may also be guilty of not wanting to paint our beloved cannabis stocks bearishly too often as well, but I assure you nonetheless that there are bearish charting setups that you need to keep an eye on if you are looking to maximize your portfolio’s potential.