For today's chart we've chosen to take a look at JC Penny Corporation (NYSE:JCP) because it recently broke below the neckline of a head and shoulders pattern. This bearish pattern is used by traders to suggest that the bulls are losing their conviction and that the uptrend is becoming exhausted. The chart below is a textbook example of how various chart patterns can form within the period of several months and it also illustrates the opportunities that are available when they are identified. Notice how the price broke out of an ascending triangle in October and how it rallied higher until a bearish reversal pattern formed and signaled a move lower.
The recent break below the neckline is a technical signal of short-term weakness and many traders will likely enter short positions in an attempt to profit from a continued pullback toward the support near the entry of the triangle pattern ($70).