H&S as a continuation pattern
Incidentally, I had gotten into a debate recently with some technicians on the validity of a H&S as a continuation pattern. It certainly is a statiscally relevant pattern as far as I'm concerned but apparently not everyone feels that way.
I, for one, agree with you here. I have observed several times these patterns (both the right and the inverse) act as continuation patterns - not just as reversal patterns.
It is indeed a very reliable pattern - according to Bulkowski's "Encyclopedia of Chart Patterns", it has only a 5-7% failure rate and a 83-63% probability to reach the implied target. (The first number of each pair is for H&S Bottoms, the second is for H&S Tops.)
So, it is not out of the realm of possibilities that we may be seeing a set up for a huge double bottom here.
Could be but I'll believe it when I see it - i.e., when the price rises above the neckline of the double bottom (the August highs).
Regards,
Vesselin