The ‘I saw it first’ illusion

People can fight for credit. They can even kill for it. There is an old joke of two amateur chartists fighting over a credit regarding who spotted the head and shoulder first. At Orpheus we consider head and shoulder the pattern of time. So if you look at price you will find head and shoulder anywhere and everywhere. The credit is an illusion, a behavioral bias. There are HNS formations that work and there are HNS formations that fail. You may not want to believe this but only 20% of HNS work. The 80-20 rule even works here. 20% of potential patterns deliver 80% of the returns. So if you can’t differentiate or isolate one HNS from the other, or the winning cases from the failures, you are fighting for a lost cause. The DOW case here illustrates a failure HNS along with potential winners.

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