Icici Bank Limited
Last up is $22 billion Indian bank Icici Bank Limited (IBN), a stock that's forming a more clear-cut example of an inverse head and shoulders setup. Icici's pattern is more clear-cut for a couple of reasons: First, this stock's head extends more definitively beyond the troughs formed by each shoulder, and second, the right shoulder is further along in development. The buy signal comes on a push up through the $40 neckline level -- that price corresponds to $27 in shares of vale.
Even though the head-and-shoulders (and its inverse) is likely the most well known technical pattern, it's still a valuable one: an academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant."
That's a good reason to keep an eye on IBN this week. When the trade triggers, I'd recommend keeping a protective stop just below $34.To see this week's trades in action, check out the High Volume Technicals portfolio on Stockpickr. -- Written by Jonas Elmerraji in Baltimore.
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