Corn Triangle Breakout But Likely Only to Megaphone Top

Corn Triangle Breakout Targets Megaphone Top

Corn Triangle Breakout Targets Megaphone Top

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.

ES & SPY False Tops May Create Additional Volatility on this Price Move

False Top Areas in Both ES & SPY May Create Additional Volatility

False Top Areas in Both ES & SPY May Create Additional Volatility

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.

Dollar False Top Forming Before Likely Explosive Move Upwards

Dollar False Top (Blue Megaphone) Would Usually Lead to Pink Megaphone VWAP Then Breakout Upwards

Dollar False Top (Blue Megaphone) Would Usually Lead to Pink Megaphone VWAP Then Breakout Upwards

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.

Upward Breakout Would Target Tops of Orange and Purple Megaphones

Upward Breakout Would Target Tops of Orange and Purple Megaphones

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.

DX Upward Move Would Require an Extra Retrace on the Daily Chart

DX Upward Move Would Require an Extra VWAP Retrace on the Daily Chart

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:

DX Abnormal Alternate Megaphone Scenario

DX Abnormal Alternate Megaphone Scenario