Gold Head and Shoulders for Mandatory Retrace

Gold May Be Forming a H&S Triangle Right Shoulder

Gold May Be Forming a H&S Triangle Right Shoulder

Gold may be forming a triangle right shoulder on a small head and shoulders top before a mandatory retrace to 1250.

1250 is a Critical Decision Level for Gold

1250 is a Critical Decision Level for Gold

1250 is the VWAP level of the blue and red megaphones on the gold daily chart, which means it’s a critical decision level for gold.  Gold could reverse there to breakout upwards through the neckline (silver) of a big inverse H&S bottom for the correction out of the 2011 high (purple scenario).

But gold has just spent months forming a top at the orange megaphone VWAP.  That would usually mean at least a trip to the bottom of the orange megaphone and often a downwards breakout from it.

A trip to the bottom of the orange megaphone would target at least 1000 and usually some small break of 1000.  Gold would have to put in a retrace to the blue megaphone VWAP at 1250 before it was legal for a big move lower than that.  A downwards breakout from the orange megaphone would target roughly 700.

TWTR Consolidating at VWAP for a Big Move

TWTR is Consolidating at VWAP of its Blue Megaphone for a Big Move in One Direction or the Other

TWTR is Consolidating at VWAP of its Blue Megaphone for a Big Move in One Direction or the Other

TWTR pierced the top of its red price channel yesterday to set up a potential melt-up. But immediately after, it cancelled the melt-up by returning to the channel bottom.

Now TWTR has broken out the bottom of the channel and is clearly consolidating across the blue megaphone VWAP.

This consolidation could form a topping pattern, like a head and shoulders, before a breakout downwards from the blue megaphone to a new all-time low (green scenario).

Or it can form a triangle continuation pattern (purple scenario) or Sornette melt-up set-up  (pink scenario) before a melt-up to the blue megaphone top.

Because the blue megaphone was legal for a breakout downwards on its last trip to the bottom, but failed to actually break out, TWTR is more likely to set up one final melt-up to the megaphone top.

The target would be roughly the 200 dma on the daily chart or the top of the red flat-bottomed megaphone in the chart below.

TWTR is Likely Topping for At Least a Retest of the Bottom of its Red Flat-Bottomed Megaphone

TWTR is Likely Topping for At Least a Retest of the Bottom of its Red Flat-Bottomed Megaphone

TWTR is likely topping for at least a retest of the bottom of a flat-bottomed megaphone on the 60-minute chart (red on chart above).

A breakout through the bottom (green scenario) would target a new all-time low.  A false breakout through the bottom would target a return to the previous high (purple scenario).

ES Likely Flat-Topped Megaphone

Flat-Topped Megaphone

ES is Likely Working on a Flat-Topped Megaphone

ES failed to break out upwards from its flat-topped triangle and it’s now appears to be forming a bear flat at the triangle bottom. That means it’s likely forming a flat-topped megaphone.

Sooner or later it will likely break out upwards to a significantly higher high.  That breakout should top with a head and shoulders pattern that completes the blue rising megaphone.

Get Ready for a Prolonged Sideways Move

Get Ready for a Prolonged Sideways Move

Because ES is forming a big protracted top on its navy blue megaphone on the daily/weekly charts, a breakout downwards from the H&S will target the megaphone bottom.  We ought to see a megaphone form there to take out the February 2016 low before a melt-up to another new all-time high as ES forms a huge topping megaphone.

TWTR Potential Melt-Up Set-Up

TWTR Price Channel

TWTR Potential Price Channel

TWTR filled its gap before taking out Friday’s low. That means it’s a favorite to put in a melt-up set-up here.

It’s already drawn a price channel on its 5-minute chart (silver on chart above).  The purple scenario is a classic breakout into a price channel melt-up set-up to the top of the blue topping megaphone.

The green scenario represents an attempt to top at the blue megaphone VWAP.  It could happen (pink scenario).  But odds are high that an attempt to top would morph into a Sornette melt-up set-up to the top of the blue megaphone.  A Sornette melt-up set-up is essentially a megaphone that fails to retrace to VWAP before breaking out upwards.

ES Flat-Topped Triangle

Flat-Topped Triangle

ES has Completed a Flat-Topped Triangle (Red)

ES has completed a flat-topped triangle (red) on its 15-minute chart.  It would usually break out upwards into a head and shoulders top on the head of a head and shoulders top (green scenario).

But they could also take it into a small fake breakout before taking it down to below the formation’s low to morph it into a flat-topped megaphone (purple) before a move up into a head and shoulders top.

There are rising megaphones on rising megaphones on the chart and that implies an extended topping process in which any head and shoulders forms a megaphone right shoulder before a trip to a squeaker new high for a larger H&S.  They are going to take it higher and they are going to drag this out.

Get Ready for a Prolonged Sideways Move

Get Ready for a Prolonged Sideways Move

This top is forming at the top of a big trading range that goes back to late 2014.  The trading range is a topping pattern for a 5-year rising megaphone (gray on chart above).

We are likely to see either a big megaphone top or flat-bottomed megaphone form up here and the market is likely only at its halfway point.

TWTR Short-Term Set-Ups

TWTR Price Channel vs Falling Megaphone Set-Ups on 5-Minute Chart

TWTR Price Channel vs Falling Megaphone Set-Ups on 5-Minute Chart

The dream short-term TWTR set-up would be the green scenario, which is a price channel melt-down set-up. That could take TWTR to the 11-12 area in minutes before any kind of start of a bottoming process.

If the price violates the price channel top, which is more likely, they’re probably taking it down to 17.50 in a falling megaphone before a gap fill.

Any genuine breakout through the topping megaphone VWAP at 18.50ish means a final trip to the topping megaphone top and roughly the 200 dma on the daily chart.

Legal Top on TWTR Targets Move to New All-Time Low

TWTR has Completed a Legal Megaphone Top (Red)

TWTR has Completed a Legal Megaphone Top (Red)

TWTR has completed a megaphone top (red on chart) and is legal for a trip to at least the bottom of the pink flat-bottomed megaphone.

Yesterday Zacks downgraded the stock from “hold” to “sell” and it has opened with a gap down.  If the market wants to run some mischief, they could still run it up one last time to the red megaphone top before the bigger move down.

TWTR could bounce off the pink megaphone bottom once it gets there or it could just crash right through it.  If it puts in a fake breakout through the bottom, the next target becomes a return to the top.

A genuine breakout through the pink megaphone neckline would target a new all-time low in the 11-12 area.  But a new all-time low would confirm a falling megaphone on the chart that could take the price lower and keep it down here a long time.

A New All-Time Low would Confirm a Falling Megaphone on TWTR

A New All-Time Low would Confirm a Falling Megaphone on TWTR

Flat-Topped Megaphone vs Flat-Topped Triangle

ES Flat-Topped Triangle vs Flat-Topped Megaphone Set-Ups

ES Flat-Topped Triangle vs Flat-Topped Megaphone Set-Ups

ES put in a quick blip downwards late yesterday to eat the stops of any daredevil who bet the breakout from the little triangle (silver) on the five-minute chart.

I warned about that yesterday.

That puts either a flat-topped megaphone or flat-topped triangle on the chart.  The main difference between the two is that the flat-topped megaphone scenario would have a higher theoretical target after breakout.

Get Ready for a Prolonged Sideways Move

Get Ready for a Prolonged Sideways Move

ES is working on a top for the navy blue megaphone before a trip to its bottom to take out the February low and put an expanding trading range (megaphone) on the long-term charts.