Tata Coffee Ltd forms bearish "Head and Shoulders Top" chart pat

Trading Central has detected a "Head and Shoulders Top" chart pattern formed on Tata Coffee Ltd (TATACOFFEE:NSE). This bearish signal indicates that the stock price may fall from the close of 105.35 to the range of 92.00 - 94.00. The pattern formed over 35 days which is roughly the period of time in which the target price range may be achieved, according to standard principles of technical analysis.

The price seems to have reached the end of a period of "distribution" at the top of a major uptrend; the break down through support signals a reversal to a new downtrend. The Head and Shoulders Top is created by three successive rallies in the price following a significant uptrend. The highest high (head) is in the middle, flanked by two lower highs (shoulders) at roughly the same level. Volume is highest as the price makes the first two rallies, then diminishes through the right shoulder. Finally volume surges as the price closes below the neckline (drawn between the two lows) to confirm the reversal.