Intuit (INTU) is poised to test and probably break a "neckline" on the chart. Let's take a look at one of the oldest and least understood chart patterns.
In this daily bar chart of INTU, below, we can see how prices have bounced off of the $200 area in late June, late July and again this month.
Using your imagination and try to visualize two left shoulders in June and July. A head in September/early October and a right shoulder this month. Maybe you see and maybe you don't. The October right shoulder rally stopped at the underside of the cresting 50-day moving average line.
The daily On-Balance-Volume (OBV) line peaked in September and has declined telling us that sellers of INTU have become more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory.
In this weekly bar chart of INTU, below, we can see the potential for further weakness. Prices are close to a test of the rising 40-week moving average line.
The weekly OBV line shows a turn lower and the MACD oscillator has crossed to another take profits sell signal.
In this Point and Figure chart of INTU, below, we can see a nearby price target of $195 but I think a decline to $197.44 will precipitate further weakness.
Bottom line strategy: In this quantitative driven world classic, chart reading is not embraced all that much. In real time let's see how this bearish price pattern plays out.
