To H&S or Not to H&S

Happy Friday the 13th, everyone.  We take a look today at the yellow H&S Pattern [what’s this?], seen here on the eminis.  There are multiple patterns within the pattern – including the red one which has already played out.  2016-05-13 ES 60 0615But, the big yellow one has been very coy.  It completed on May 4, even spent two sessions below the neckline before popping back above it.  Yesterday, it dropped back below for the the 7th time.

We care about these patterns because they are great forecasters of future moves — this one targeting 1981.  But, what does it mean when they suffer from a failure to follow through?

The obvious answer is that TPTB are working very hard in the background to prevent a big drop.  Just look at USDJPY this morning, and you’ll see what I mean.  Honestly, is there any reason why a slightly higher than expected, but still anemic, retail sales figure (which is probably rubbish in the first place) should send the USDJPY spiking like that?2016-05-13 USDJPY 5 0615Of course not.  But, the yen carry trade is still fresh enough in everyone’s minds (more importantly, the algos’) that it turned ES’ 7-pt loss into a 1-pt gain.  Happens nearly every day.

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