The market is replete with very clean patterns these days. One of them, until just hours ago, was that of Super Group, shown below without today’s price bar.
This was a nearly perfect H&S top, and I was short the stock. I say “was” because this happened.
Is that the expected result of an H&S top? No. Does it negate my interest in this for now? Yes, it certainly does.
A clean pattern by no means guarantees a certain outcome. However, when the rationale for a trade is violated, there is no point in sticking around. I gritted my teeth long enough to cover the short at weaker prices (notice how the open was the strongest and it slipped hard afterward), but it was still a loss, and very much an unexpected one.
My hunch is that, months or even weeks from now, SGHC will fall hard like the pattern predicted, but I’m not going to stick around based on a hunch. This seems to happen a lot, however, such as with RBRK, just as one example, shown below. It was breaking down nicely when, VOOM, it spiked higher deep into the pattern.
A couple of days post-voom, however, it started eroding again, and now it’s so low that anyone short the stock, at no matter what recent prices, would be showing a profit.
