Stock of the day: Johnson & Johnson

In today’s Stock of the Day, let’s turn our attention to Johnson & Johnson, which is currently nearing the conclusion of a compelling bearish pattern—the head and shoulders. This classic formation, marked with orange rectangles, is about to reach its critical point, as the price tests the neckline after completing the right shoulder. The neckline, shown by the black line on the chart, now holds the key to J&J’s near-term future.

If the price bounces off this neckline, it would signal a potential denial of the bearish setup and serve as a buy signal, indicating the formation might be invalidated. However, a more likely outcome, given the clarity of this pattern, would be a breakout below the neckline, which would confirm the head and shoulders formation and activate a strong sell signal. A break below this black line would confirm the bearish sentiment and open the door for further downside.

Considering the precision of this setup, the bearish scenario appears more probable. I’m keeping a close watch for a downside breakout, which would provide a definitive signal to go short on Johnson & Johnson.

Source: https://www.axiory.com/analytics/stock-of-the-day/stock-of-the-day-johnson-johnson-6