ES broke out of its potential head and shoulders formation at the Sunday open (orange neckline) and there was immediate buying into the selling. Since that, it’s just been sitting there like an egg.
But ES has a new price channel on its chart (purple) with a downward test breakout. It should retrace into the H&S and the purple price channel to the VWAP of a megaphone down there (silver) at the 1987 area.
ES should reverse there for a downward breakout from the purple price channel into a steeper channel (pink on chart) and a likely melt-down to at least the bottom of its 2-year+ rising wedge and probably 1925.
If it gets through 1925 it’s probably going for the bottom of a larger megaphone at roughly 1850. That’s also the VWAP area of an even larger megaphone that’s been forming for almost a year.
From there it would retest the bottom of the 2-year+ rising wedge, putting in the right shoulder of a larger head and shoulders.
It it gets through that H&S neckline it’s going for 1650 or lower.
Bullish Scenario: If ES breaks out the top of the new purple price channel, it’s probably forming a bottom before a big move up.
Note that the CPCI moved down to 0.92 on Friday, significantly below its 20 dma. The big money doesn’t look too scared.