DTT Buzz

The neckline in a topping head and shoulders pattern usually slants slightly upward. Sometimes it is horizontal, but in either case, it doesn't make a lot of difference. Upon occassion, the top neckline may slant downward, which is a sign of market weakness, and is most often accompanied by a weak right shoulder. This downward slope in a top is a mixed blessing for our Swing Trading, Options Trading or Day Trading master. If he or she is waiting on the breaking of the neckline to start a short position, they will have to wait longer now because the signal in a downward slanting neckline occurs much later and after most of the move has taken place. When looking at basing paaterns, most necklines slope downward slightly. A rising neckline can occur indicating greater market strength. However, the same drawback of giving a later signal is true here as well.

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