This could possibly be a major break for shares of Herbalife. Some might call this particular price pattern a “head and shoulders” and others may refer to it as a “rounding top”. Regardless of the name, it’s the implications here that really matter.
This is a daily chart of $HLF where we can see a series of higher highs into January. The rally in February reversed course before being able to make a new higher high. This would be the “right shoulder” of what some chart watchers may refer to as a head & shoulders top:
The neckline sits right around $59-59.50 which represents the November and January lows. As long as prices are below this “neckline”, prices are confirming this topping formation. I would be particularly concerned with a weekly close below this level.
Confirmation of a breakdown would give us a measured move target around $42 which takes us to the summer 2013 lows. This price target is achieved by taking the percentage difference between the neckline around 59 and the top in January above 83.
The bulls are still battling here trying to dig in and keep things bullish for shares of Herbalife. We have our levels and I think they’re worth paying attention to.
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