Ecopetrol

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.

>>Practice your stock trading strategies and win cash in our stock game.

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.

RELATED LINKS:
 
 
 
 

Follow Stockpickr on Twitter and become a fan on Facebook.  

To see this week's trades in action, check out the High Volume Technicals portfolio on Stockpickr.
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 MSNBC.com.

If you liked this article you might like

Market Is on the Straight and (Very) Narrow

Look Back to Go Forward

Stock Observations; Reviewing Equities: Doug Kass' Views

Even North Korea's Kim Jong Un Can't Stop This Epic S&P 500 Stock Rally

Robots Might Be Biggest Obstacle for Stock Market Bears