Keep an Eye on This Pattern Shift

When I see a pattern shift on a chart, I take notice. When this occurs you should look at the next pullback -- because, often enough, it could be the beginning or a more important reversal in that stock or index.

Here's what I mean by a pattern shift, using the daily chart of KB Home (KBH) as an example. As you can see on the chart below, this stock went from a pattern of lower lows and lower highs (see the general swing from the May 15 high to the Aug. 15 low), and then it shifted to taking out a prior swing high of $17.95. That indicates a break in the prior bearish pattern, and the assumption is that the new pattern will be higher highs and lows....216 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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