DOW Broke H&S Neckline Today. Bearish Reversal Likely.

Today the Dow finally made a close below the neck line of the head and shoulder's it has been forming.  Here is a current chart of the Dow.  (click the image to enlarge)

The head and shoulders pattern is a bearish reversal pattern, meaning when we see this pattern form it usually turns into a reversal.  The confirmation of the pattern and the signal to enter bearish positions comes with a close below the neck line of the pattern.  Today we finally have that close below the neck line.  See the image below (click to enlarge)

This very colorful graphic labels the parts of the H&S pattern.  This particular formation is a little unique in that there are 2 hits on the left shoulder. The Yellow line outlines the entire pattern.  The 2 left shoulders are marked, with the head being the peak in the middle, and the right shoulder is formed on the right.  The neck line is formed from the short term support after the left shoulder.  It is marked with the green line.  While yesterday we did break the line, the day closed above the neck line and did not confirm the break.  But today closed below the line, thus confirming the break. If this pattern pans out bearishness in the overall market is an appropriate trade.