Lead up: A significant 9% decline in the S&P 500 with increasing volume.
Formation: Left shoulder formed as a minor recovery from the initial decline with volume tapering off. This was followed by a second decline that carried prices below the bottom of the left shoulder, coinciding with volume picking up again. Next, another recovery brought the price above the bottom of the left shoulder, with volume increasing slightly. Lastly, a small decline where the right shoulder is formed. This was done on slightly less volume then the proceeding step.
Entry/Exit Point: The confirmation candle happened on June 15, 2012. The candle burst conspicuously through the "neckline" accompanied by an 80% increase in volume compared to the daily volume moving average 50. The exit point calculated by adding the difference of the neckline and bottom of the reversal pattern to the top of the neckline, which gives you approximately 1390 (obviously as I am posting this that target has already been met).
Final Thoughts: On June 25, 2012 you can see a retest of the upper limits of the reversal pattern which is not uncommon. This is followed by a slow and rocky uptrend to reach the target zone. It is important to note that the 1390 area does not mean the end to the uptrend, but as one can see from the chart this area does provide strong resistance.
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