Today SPY closed at its short-term megaphone (purple lines) top on its daily chart (above), though it has not quite reached the top on its 30-minute chart (below). (ES broke through its megaphone top on its daily chart.)
That means a little more creepage higher is likely, though not required, before SPY retests the megaphone VWAP. SPY could also twine around the top of the megaphone for days or even weeks before the retrace to VWAP, but that’s not very likely because the 50 dma will be at VWAP Monday. (In a Sornette bubble, this would be a great time for another test of the 50 dma.)
In any case, whether sooner or later SPY has to return to its megaphone VWAP to make a decision about whether to break out the top or the bottom of the formation.
For this short-term megaphone, there is a double VWAP, with one VWAP at roughly 179.35 and the other at roughly 181. SPY has to make it to the lower VWAP (though this VWAP can move up during the period while SPY is getting there.)
Often when you see a double VWAP, you will see the price make a triangle or megaphone or inverse H&S between the two VWAPs. An upward breakout from the internal triangle or megaphone or inverse H&S would be a set-up to bet on an upwards breakout from the larger megaphone. A downward breakout from the internal triangle or whatever would make the next target the megaphone bottom.
A trip to the megaphone bottom would likely signify the start of a protracted sideways move, like a months-long head and shoulders formation. There’s no way to know for sure if we’re entering a protracted sideways move until we actually see the length of any wave to the megaphone bottom.
A reversal at the purple megaphone VWAP with a breakout through the megaphone top would mean the long-term bull move and Sornette bubble formation has further to go.