GE is forming a head and shoulders top. In a sentence, the head and shoulders is a pattern that indicates exhaustion among buyers. It's formed by two swing highs that top out around the same level (the shoulders), separated by a bigger peak called the head. A breakdown below the support level that connects those three peaks (called the neckline) is the signal to sell or short shares. The neckline in GE comes in right at $20.30.
Since the neckline hasn't been broken yet, this stock isn't signaling to sell (or short) just yet. That dashed grey line, for instance, is still connecting higher lows in this stock. But it's worth mentioning that a breakdown below the neckline will also coincide with a break of that trendline support level at this point. For that reason, I'd recommend keeping a close eye on this stock - there's an absence of bids below that level, so if the neckline does get broken, the move lower could be quick.To see this week's trades in action, check out this week's Must-See Charts portfolio on Stockpickr.
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