Not all of this week's Must-See Charts are showing bullish setups. Quite the opposite is taking place in shares of Columbian oil and gas company Ecopetrol ( EC). A bearish head-and-shoulders setup in shares of this $85 billion industrial could accelerate selling in this name.

A head-and-shoulder top is probably one of the most popular technical patterns out there among would-be traders. Simply put, it's formed by two intermediate peaks in a stock's share price (shoulders), with a larger peak in between them (head). Just because it's a common setup doesn't mean its not worth looking at -- a recent study shows that this pattern is both statistically and economically significant for traders.

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For Ecopetrol to become an actionable short candidate, we'd want to see shares break down below the stock's neckline just below $42. 

-- Written by Jonas Elmerraji in Baltimore.


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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on

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