A New High in Gold Would Be A Melt-Up Set-Up

If Gold Takes Out the July 6 High it would Confirm a New Rising Megaphone (Red)

If Gold Takes Out the July 6 High it would Confirm a New Rising Megaphone (Red)

Gold is working on the right shoulder of a head and shoulders with a neckline at roughly 1310. The minimum target upon breakout would be the blue megaphone VWAP at 1130, but gold would be a strong favorite to make it back to the bottom of the orange megaphone at a little below 1000.

If instead gold puts in a right shoulder failure and upwards breakout from its H&S, it will be confirming a new rising megaphone (red on chart).  It will also be confirming a breakout from a jumbo inverse H&S bottom (blue neckline) on the daily chart.

The move after the breakout would typically be a melt-up.

The target would be the orange megaphone top, or roughly 1600, and if the move were to fizzle out lower we’d have plenty of warning.  Rising megaphones tend to fizzle out with a price twining up the bottom and they tend to top with head and shoulders formations.

DB is Likely to Take a Long Time Bottoming

DB has Started Megaphoning and is Unlikely to Form a Clean Inverse H&S Bottom within its Orange Falling Megaphone - That Means it is Likely to be Down Here a Long Time

DB has Started Megaphoning and is Unlikely to Form a Clean Inverse H&S Bottom within its Orange Falling Megaphone – That Means it is Likely to be Down Here a Long Time

DB had a potential set-up on its daily chart for a fast inverse H&S bottom within its orange falling megaphone. That bottom could have broken out into a melt-up to last October’s high.

But DB failed to pull the trigger on that set-up.  Instead it started to megaphone in the head of that potential inverse H&S.  That delay means DB is likely to take a long time forming a megaphone or double-headed inverse H&S bottom down here before a return to the October high.

DB is likely about half-way through a prolonged bottoming process.

TWTR Breakout

Flat-Bottomed Megaphone

TWTR has Broken Out of Its Blue Megaphone & Navy Blue Flat-Bottomed Megaphone with a Target of the Red Flat-Bottomed Megaphone Neckline

TWTR has broken out of two topping formations with a target of at least the neckline of the red flat-bottomed megaphone.

It could just slice right through the red neckline for a crash to a new all-time low, or it could bounce off the neckline before breakout to a new all-time low, or it could put in a small fake breakout and reenter the formation for a trip back to the local high.

If TWTR recrosses the bottom of the navy blue flat-bottomed megaphone before reaching the red neckline, it’s forming a larger megaphone top (orange scenario).

Assuming TWTR gets through the red neckline at some point, we’ll know more about targets and likely bottoming formations when we’ve locked in the high before breakout.

The Longer Before Breakout, the Bigger the Top

The Longer It Takes ES to Break Out of its Flat-Topped Triangle or Megaphone, the Bigger the Breakout Can Be

The Longer It Takes ES to Break Out of its Flat-Topped Triangle or Megaphone, the Bigger the Breakout Can Be

ES has morphed its flat-topped triangle into a larger flat-topped triangle (red). And it can still morph the larger triangle into a flat-topped megaphone (purple scenario).

The only difference it makes is that the longer ES moves sideways here, the farther away the top of the blue rising megaphone gets, which means the higher ES can go after breakout (I couldn’t fit the full purple scenario on the chart).

Also, note that the purple scenario would be unlikely to complete a head and shoulders inside the blue rising megaphone, which means that ES would likely put in a megaphone right shoulder and another new high after breakout.

Get Ready for a Prolonged Sideways Move

Get Ready for a Prolonged Sideways Move

ES is likely working on a topping formation before a move back to its February low (or below) to set up a larger topping formation on the daily and weekly charts.

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.