RIO needs a neckline

Hello CRISS members! Having been frustrated by the difficulties in relating pictures strictly through words and to save time and unnecessary complications, I set up this blog so I can post charts and ideas and get feedback. First post is prompted by Michael O. bringing RIO (Companhia Vale do Rio Doce) a mining company which looks like its forming a nice head & shoulders reversal pattern. We're discussing the neckline and where it should be drawn. Feel free to post strategy also as we can revisit this and check whose interpretation was most accurate in the future. This is going to be fun.

I interpret Rio's chart this way because the neckline is meant to be drawn between the two bottoms on either side of the head formation. It's up to the individual whether to include the shadow in a candle chart or not. I choose to acknowledge it because I've seen it line up so often and hit proven support or resistance even though it closed a lot higher or lower than the shadow. Also, if you look at a line chart, the first little bottom is the only one that shows up, the second dip doesn't show how far the trading range actually was for that day. I wouldn't mark this as the end of the first shoulder because it looks like a bump in the road on the way to reaching the head top. I read that the slope of the neckline adds bullishness or bearishness depending on its slope. In this case the slope is down, so it's got a more bearish atmosphere to it, unlike the H & S neckline we're watching on the major indices right now which is sloping up.

You can see my target on RIO from the purple lines and the supports at $21 and $24 which both have instances of resistance becoming support indicated by the arrows. I know it could stop short or farther than the target and we'll have to watch it and see, but as things stand, I'm going to say, judging from...
the increase in volume on the declines of both the head and the right shoulder,
the weekly MACD crossing below its signal line,
the weekly RSI coming just short of overbought, reversing, and now almost at 50,
it breaking its 10 week moving average,
the precious metals BP reversing from 70%,
the larger market issues, and a couple of others I can't think of right now...
I would watch for a strong neckline break, buy partial, if there's a return, buy a second half put and watch the carnage. Should be interesting to watch. Either way, I'm going to be learning.