We're seeing the exact same setup right now in Indian communications stock
. Like UNFI, Tata is forming an ascending triangle, in this case with a neckline level at $8. The sell signal comes after a breakdown below that $8 level.
The head and shoulders pattern is well-known, but don't think that it's too high-profile to be worth trading. The research suggests otherwise: A recent 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 reason to keep an eye on UNFI and TCL's neckline levels this week.
To see this week's trades in action, check out the
Technical Setups for the Week portfolio
-- Written by Jonas Elmerraji in Baltimore.
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