For today's chart we've chosen to take a look at
Kellogg Co. (NYSE:
K) because it is testing the resistance of a
head and shoulders pattern. As many of you know, it is not uncommon to see a sharp
pullback following a move below the
neckline, as was the case in early January. This pattern is a staple amongst many technical traders and it is often used to predict a shift in a long-term uptrend. Notice how the recent rally came to an end when the price neared the horizontal trendline.
We expect that the bears will regain control of the momentum and prevent the stock from moving above the nearby trendline. Traders will likely set their short-term targets near the January low (near $47).
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