Alcoa (AA) – Inverse Head and Shoulders Chart

I charted Alcoa (NYSE: AA) this morning when it was trading at $13.02.  Thanks to Qmar who suggested through Twitter I check out AA and the “huge inverse head and shoulders”.  I highlighted what I think he saw.  I drew the chart from the past nine months and noted the head and shoulders on each side of the head.  On Monday AA broke out above the neckline of the previous highs and has inched higher yesterday and this morning.  Those three previous highs that gave a hard neckline were descending slowly starting with $12.57, then $12.44 and finally $12.38 in June.   The breakout this week could mean AA is about to take off like a rocket.

Adding to that likelihood is the return of AA into its old trading channel.  I drew thin lines here because I’m not 100% convinced this will remain a reality.  The top line of higher highs shows AA could head towards $14 easily.  The lower line of higher lows shows potential support above $12.50 give or take.  If this head and shoulders pattern breaks, AA could fall all the way back down to its shorter trend line of higher lows closer to $10.00.  If it dips that low I’ll be ready to buy in with a big shovel.  I’ll probably regret not buying in here with this breakout.