China Mobile Shares in Head-and-Shoulders Pattern

China Mobile Ltd. (ADR) (NYSE:CHL) shares are up 1.6% but and thanks to the wonderful charts at finviz.com, CHL is now trading in a classic head-and-shoulders pattern.

China Mobile shares have come down since August and have traded between $40 to $59 over the past 52 weeks.  CHL shares are just 8% down from its 200 day moving average and 3% down from its 50 day moving average. Now back to the "Head and Shoulders" pattern.

According to Investopedia.com, a Head And Shoulders Pattern is a technical analysis term used to describe a chart formation in which a stock's price:

1. Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines.
3. And finally, rises again, but not to the second peak, and declines once more.

The first and third peaks are shoulders, and the second peak forms the head. The "head-and-shoulders" pattern is believed to be one of the most reliable trend-reversal patterns.

See the current China Mobile chart below and its 'head-and-shoulders' pattern below.   Another good example and study of 'head and shoulders' patterns can be found at trade10.com - click to read. So will CHL shares keep falling and have we reached a bottom?

Time will tell and for those of us watching China Mobile shares on the sidelines, the time to go long could be approaching in the next few weeks.  If you go by the chart then why not have the patience to see if you can get in at the $42 range?  CHL is a great company and in 2010 this could be a great stock to get in while it trades in the low $40's.

Disclaimer: No positions in any of the securities mentioned in this publication.