What? You didn’t read about the Eiffel Tower topping pattern in your Edwards & Magee textbook?
The great Chris Kimble of Kimble Charting Solutions originally came up with the idea:
“When an asset starts looking like the left side of the Eiffel tower, one should consider reducing some exposure to this holding, because odds are high that if you see the left side of the Eiffel tower, somewhere down the road you will see the right side of the tower (in the chart pattern)!”
The behavior of the Shanghai Composite over a two-year period beginning in late 2006 is a classic example of this Eiffel Tower Formation:
Doug Short has a great post up today about the Shanghai Composite. It logged its 4th consecutive daily decline today and the 15th decline in the last 20 sessions. dshort also includes a logarithmic chart in his post showing a less funny, but much more accurate visual representation of price movements over time. Go check it out.
Tags: $SSEC $FXI $EWH