Retesting Megaphone Top

ES is Retesting the Top of its Big Navy Blue Megaphone from Inside

ES is Retesting the Top of its Big Navy Blue Megaphone from Inside

ES is retesting the top of its big navy blue megaphone from inside. As long as ES stays inside the navy blue megaphone top, the short set-up is intact.

ES is Megaphoning Across the Top of its Red Falling Megaphone on the 60-Minute Chart

ES is Megaphoning Across the Top of its Red Falling Megaphone on the 60-Minute Chart

On the 60-minute chart, ES is megaphoning across the top of the red falling megaphone it confirmed Sunday night.  ES did not complete a proper inverse H&S inside the red falling megaphone before piercing its top.

That megaphone could break out upwards (pink scenario), taking ES back out of its big navy blue megaphone and extending the orange rising megaphone on the daily chart.

Or the megaphone could form a series of megaphones inside megaphones to form a continuation pattern here before another big drop (purple scenario).

Or the megaphone could quickly break out downwards to continue the drop within a slightly modified red falling megaphone (green scenario).

Or ES could form a megaphone just underneath the navy blue megaphone top before breaking out upwards to take ES to a new all-time high (orange scenario).

Because ES did not form a proper inverse H&S bottom inside the red falling megaphone, the green and purple scenarios are most likely.

If ES gets going downwards again, there’s a good chance a price channel will set up to break it out through 2300 into a melt-down to at least 2150.  That kind of melt-down set-up would be a perfect entry into the trade if you aren’t short already.

ES Break-In and Breakout

ES is Back Inside Its Navy Blue Megaphone & has Broken Out of its Orange Rising Megaphone

ES is Back Inside Its Navy Blue Megaphone & has Broken Out of its Orange Rising Megaphone

ES is back inside its navy blue & light blue megaphones and has broken out of its orange rising megaphone after a legal top.

That means we ought to see at least 2150 before we see ES break out of the navy blue megaphone again, and we could see the navy megaphone bottom. If ES makes it to the navy blue megaphone bottom, we could even see the megaphone break out downwards into a huge correction after a retrace to its VWAP.

ES has Formed a Falling Megaphone (Red) that will Eventually Need a Retrace to its Top

ES has Formed a Falling Megaphone (Red) that will Eventually Need a Retrace to its Top

Big megaphone moves down often start with a price channel melt-down set-up. But instead, ES has set up a falling megaphone (red on 60-minute chart) since its March 16 retest of the high.

ES could form a price channel inside the red falling megaphone and melt all the way down to 2150 inside it (green scenario).  Or the move to 2150 could be a lot messier, with ES forming an inverse H&S bottom around here before retracing to the red falling megaphone top and heading down again (purple scenario).

If we get the purple scenario, it would likely be slow moving enough for the move to the red falling megaphone top to be another retest of the big navy blue megaphone top from inside.

Anyway, at this point you should be short as long as ES is inside that red falling megaphone.  If you don’t mind hanging on through retraces and you’re not playing something time sensitive like options, you could be short unless ES breaks back out of the navy blue megaphone top.

This would usually be a strong short set-up.  The only thing nagging at me about it is that ES failed to complete a potential extension in the orange rising megaphone and put in an indecisive, awkward top on the navy blue megaphone.  That means you have to take your stops seriously in case ES heads up one more time to put a bigger top up there.

Potential Sornette Melt-Up Set-Up

ES has a Potential Sornette Melt-Up Set-Up (Red Box, Purple Scenario) Across its Red Megaphone VWAP

ES has a Potential Sornette Melt-Up Set-Up (Red Box, Purple Scenario) Across its Red Megaphone VWAP

ES took a serious stab at the blue megaphone VWAP at 2362 yesterday. That’s all it needed to complete a top here and break out downwards past Tuesday’s low with an initial target of 2150.

But that serious stab at the blue megaphone VWAP put a potential Sornette melt-up set-up on the chart (inside red box).  Sornette melt-up set-ups typically break out upwards with a double bobble (purple scenario) that could break ES out through 2362 for a melt-up to the blue megaphone top and new all-time highs.

Sornette melt-up set-ups that fail usually fail in the second bobble when the price takes out the low of the first bobble. But you can’t count on getting a second bobble.  Sometimes the only place you can see a second bobble is on a two-minute chart.

If the Sornette melt-up triggers, the melt-up would usually take the form of either a series of price channels or a rising megaphone.

ES Appears to be Twining Up its Navy Blue Megaphone Top

ES Appears to be Twining Up its Navy Blue Megaphone Top Waiting for the Big Decision

Here’s what it looks like on the daily chart (from yesterday). If ES reenters the navy blue megaphone, it’s headed for at least 2150. If ES breaks out through 2362, it’s headed for new all-time highs and the price could go a lot farther than drawn on the chart.

Twining Up Megaphone Top

ES Appears to be Twining Up its Navy Blue Megaphone Top

ES Appears to be Twining Up its Navy Blue Megaphone Top Waiting for the Big Decision

ES appears to be twining up its navy blue megaphone top avoiding a decision on whether to break out of its orange rising megaphone or go for another new all-time high.

There’s a small megaphone up near the high that could use a retest of its VWAP at 2362, but something big, like a vote on the Obamacare replacement bill, could get things moving before ES reaches that target.

A breakout from the orange rising megaphone sets the green or purple scenario in motion.  Decisive liftoff from the navy blue megaphone top sets the blue scenario in motion.  The orange rising megaphone is steep, so the blue scenario could go a lot further than I’ve drawn it.

Short Set-Up to At Least 2150, But Keep an Open Mind a Little Longer

ES is Back Inside Its Navy Blue Line - That's a Short Set-Up to At Least 2150

ES is Back Inside Its Navy Blue Line but Not Yet Broken Out of its Orange Rising Megaphone

ES is back inside its navy blue megaphone/rising megaphone top. That’s a short set-up for a move to at least the light blue megaphone VWAP at 2150 (green and purple scenarios).

But ES hasn’t broken out of its orange rising megaphone yet and the recross of the navy blue line is still very small, so I would keep an open mind and a tight stop until ES has retested the navy blue line from inside and broken out of the orange rising megaphone.

If ES breaks back out of the navy blue line, the orange rising megaphone is extending and we’re in the blue scenario.  In the pre-HFT days, that would have been a rare occurrence, but the bots these days like to do small ritual breaks of important lines before reversing.  In that case, the price move could be bigger than I could fit on the chart.

The House vote on Ryancare is Thursday.

ES is Mini-Plunging to Critical Decision Point at 2350

If ES Breaks Down Through the Red Megaphone VWAP at 2350 & Reenters the Navy Blue Top, It's Likely Going for At Least 2150

If ES Breaks Down Through the Red Megaphone VWAP at 2350 & Reenters the Navy Blue Top, It’s Likely Going for At Least 2150

ES has mini-plunged this morning through an important trend line on its 60-minute chart and is retesting a megaphone VWAP at roughly 2362.

It could turn up from here to another new all-time high.  That is the pink scenario and it could go a lot higher than I’ve drawn.  Any failure to reenter the navy blue line could result in a blow-off top.  I’ll post new scenarios if that develops.

If ES can get through 2362, the critical decision point is at roughly 2350, which is both VWAP of the red megaphone on the chart and the top of the navy blue megaphone and rising megaphone or price channel. The 2350 level should be a strong magnet for ES on this mini-plunge.

If ES breaks down through 2350, it would usually go for at least 2150 and could go as far as 1800 and set up an even bigger correction from there.

Note that even if ES is going to reverse at 2350, it would usually break that level a little to form a bottoming formation.  The question is whether ES can reenter that navy blue line.

 

ES Potential Price Channel

ES is Trying to Set Up the Blue Price Channel to Get to a New High to Confirm the Silver Rising Megaphone

ES is Trying to Set Up the Blue Price Channel to Get to a New High to Confirm the Silver Rising Megaphone

ES got bought a little bit at the bottom of the potential blue price channel, but it usually does. It’s trying to work its way to a new high before breaking the channel bottom to confirm both the channel and the silver rising megaphone.

If the blue price channel confirms with a new channel high, it will be in its critical decision wave for starting a stop (green scenario) vs. breaking out into a melt-up (orange scenario).

If instead it can kill the channel before confirming, and break down through the red megaphone VWAP at 2350, it’s going to the red megaphone bottom to start a likely much bigger correction (first target 2150).

Some Big Swings Setting Up in Gold

Gold is Likely Forming a Triangle (Orange), which Means Some Big Swings are Setting Up to Retest its Top and Bottom

Gold is Likely Forming a Triangle (Orange), which Means Some Big Swings are Setting Up to Retest its Top and Bottom

Gold is now megaphoning across 1200, which is VWAP of the big megaphone that’s been forming since late September 2014. That makes gold a favorite to complete a triangle (orange) across 1200. The triangle could break out in either direction.

If gold is forming that triangle, it will soon be putting in some big swings to set up the formation’s top and bottom.  Those will be swings to the blue and red megaphone tops and bottoms.

If gold can break out upwards through both 1230 and 1250, it will be going for a retest of the July 2016 high.  If instead gold is turned back at 1250, it will likely be going for a retest of the December 2016 low before the retest of the July 2016 high and subsequent retest of the November 2015 low.

Be aware that triangles tend to be comprised of a series of megaphones inside megaphones, and they can get very messy in the middle.  The moves coming up may not be as clean as drawn.