ES put in a breakout from an inverse H&S at the close. But there were several problems with the breakout.
The first was that, on the biggest volume bar of the day, there was virtually no price movement, meaning the inverse H&S breakout was getting heavily sold into. It isn’t little guys who sell into inverse H&S breakouts.
The second problem was that the right shoulder formed a megaphone (red on chart). That right shoulder megaphone isn’t legal for an upwards breakout–it would need a retrace to VWAP first to be legal.
ES also had a potential price channel melt-up set-up on the chart near the close, but it didn’t break out of that properly either. ES blew a number of Sornette melt-up set-ups today as well as the breakouts got sold into each time.
The bright blue megaphone on the chart would usually see a retrace to VWAP at 1960 before a breakout downwards. My guess is that one way or another ES will work its way back to 1960 before taking out the low of Monday, August 24th, but I can’t be sure. It could just form a topping pattern at the top of the red right shoulder megaphone and then head down.
The strongest set-up on the chart remains the August 24th NYMO close below -100, which gives strong odds of the market taking out the August 24th low before it takes out the August 27th high. The exact way ES makes it to that lower low will tell us a lot about how much of a lower low it is likely to put in and whether it’s likely to put in a new all-time high after.