Today's analysis focuses on Berkshire Hathaway, which is currently forming a potentially bearish head and shoulders pattern on the weekly chart. Despite still being near long-term highs, the formation marked by a green rectangle suggests caution, as the stock appears to be in the process of building the right shoulder of this pattern.
The head and shoulders formation typically signals a reversal and a potential sell opportunity, though it is not yet active. For the sell signal to become valid, the price must close below two key levels on the weekly candle:
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Yellow horizontal support, which serves as the neckline of the formation.
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Blue uptrend line, which has provided support during the stock's long-term rally.
If the weekly candle closes below both levels, it would trigger a strong sell signal. Further confirmation and strengthening of the bearish outlook would occur if the price subsequently breaks the red uptrend line, indicating deeper downside risk.
For now, buyers can remain optimistic as long as the price stays above the yellow support area. This level can serve as a potential bounce point, and any bullish price action around this support could present a buy signal for traders looking to capitalize on a potential reversal to the upside.
Traders should monitor the price action carefully, as the formation is nearing critical support levels that could dictate Berkshire Hathaway’s next major move.