XP Inc. (X) - Inverse Head and Shoulder - Potential long trade

24 thg 1

Since May 2022, a potential inverse head and shoulders pattern has been forming. It has not been confirmed yet, as the right shoulder is still missing and undergoing completion. Once it forms and the breakout of the neckline is confirmed, we will have our entry signal.

I have also applied the Elliott Wave Theory for analysis, confirming the potential pattern for a new impulse of wave 1 after completing an ABC correction wave. From this perspective, two scenarios are plausible:

-Wave 1 < wave 1 is complete, so we should await the subsequent correction of wave 2, which may appear as a lateral movement until the breakout of the neckline.
-Wave 2 has already formed, and we should await the new impulse of wave 1 < wave 3 < wave 1.

Regardless of these scenarios, the signal is the breakout of the neckline, with the target price set at $53 and the stop-loss at the halfway point between the low of the head and the neckline, at $18.60. If the target is reached or nearly reached, then the position should be managed with a trailing take profit and stop loss.