Corn broke out upwards from a triangle (pink on chart) today, but that breakout is likely within a larger megaphone (blue on chart).
The target for the triangle breakout is the megaphone top. From there corn will likely head down to take out the March 11 low by enough to create an internal megaphone at the top of the blue megaphone. The green scenario on the chart is the more likely based on how megaphones usually develop.
SPY has reached the false top area of its gray megaphone on the chart above. (That stuff is behind us for the smaller megaphones on the chart.)
At false top areas you will often see small topping patterns form and lead to a retrace to the VWAP for that particular megaphone. When you have a series of megaphones embedded within larger megaphones, as we do now in ES and SPY, you can get a false top and retrace to VWAP for each larger megaphone. This can create a lot of volatility without changing the target for the price move.
It can be dangerous to try to trade false tops because they don’t always form. And sometimes they start to form and then give up without completing.
Again, the volatility created by false tops doesn’t change the target for the price move.
The Dollar Index (DX) seems to be completing a false top (blue megaphone). These occur in megaphone 5th waves at roughly the level of the previous touch on the top of the megaphone (pink in chart).
After a false top the price would usually retrace to the pink megaphone VWAP and then break out the top of the pink megaphone. This breakout would represent a breakout across VWAP (horizontal orange line) of a larger megaphone. Then there would be a mandatory retrace to the orange megaphone VWAP.
Also, you have to keep an eye on both the daily and 60-minute charts, because price will often react to something on one that isn’t there on the other. See the chart directly below.
This looks a lot like the potential bullish ES & SPY scenarios.
However, if anything is going to violate normal technical rules, it would be the DX. Here’s the kind of alternate scenario we could see: