Technical Preview: Target before earnings has a potential bearish pattern
On the daily chart there is an unusual potential bearish pattern which could be both an "island" top and a bearish head and shoulders. The neckline for the pattern is in the $107-$106.50 area. A break below that level on a disappointment and especially a larger gap would confirm the pattern is active. Downside potential if that pattern triggered and completed would be to the $97 area. Due to the big bullish gap from the summer, next major support would be at the $90 area. If the news is a positive surprise, a breakout above the right shoulder of the potential head and shoulders at $115.50 or better would void the pattern. The upside move on better news or outlook could be equal in dimension to the expected downside from the pattern, suggesting a move into the low $120s could be possible.