Russell 2000 (IWM) Head and Shoulders Suggests More DownsideA head-and-shoulders (H+S) pattern in the IWM suggests more downside.
A while back I posted about the downward breakout from a nearly 12 month trading range in IWM. At the time, I had not seen the H+S pattern that had formed. The breakout (violation of the neckline) in the H+S pattern occurred several days after the downward breakout of the trend channel.
@CMT_Association posted recently with excellent Fibonacci and P&F analysis providing credible targets / objectives to the downside. His post also pointed out IWM's relative strength versus SPX. IWM has been relatively the weakest major index in the US the past year.
To add support to the downside targets discussed by @CMT_Association, I would note that one measuring objective for a H+S pattern is to calculate the maximum depth from the head of the H+S pattern to the neckline and project that distance from the breakout point. This method yields a target of approximately 174-175 in the IWM (ETF tracking Russell 2000). This 174-175 target based on the H+S pattern, interestingly, lies between the two Fibonacci retracements discussed by Stewart in his recent insightful post, which were 169.52 (.50) and 186.90 (.382).
