Head and Shoulders with Triangle Right Shoulder Says Top

Potential Topping Triangle/H&S with Triangle Right Shoulder

Potential Topping Triangle/H&S with Triangle Right Shoulder

ES has formed an ugly topping pattern in the critical decision point of its 3-year price channel.

You could call it either an ugly version of a topping triangle, or a head and shoulders with a triangle right shoulder. A head and shoulders formation with a triangle right shoulder almost always breaks out downwards.

The H&S/topping triangle would target roughly the area of the October 15 low if they actually break out downward.  A reversal there would set up a larger head and shoulders formation, with the price moving into the right shoulder on a retest of the 3-year price channel bottom.

A larger correction could abort if the right shoulder of the larger H&S turns into a megaphone, which would suggest a trip to a new all-time high.  Any topping pattern can morph into a small piece of a larger topping pattern, and any topping pattern can morph into a continuation pattern.

Potential Megaphone Morph into Triangle

A New Megaphone (Bright Blue) has Formed that Suggests ES is Forming a Triangle

A New Megaphone (Bright Blue) has Formed that Suggests ES is Forming a Triangle (Pink)

A new megaphone (bright blue on chart) has formed inside the navy blue Sunday night megaphone.

A new interior VWAP megaphone in this spot strongly suggests a triangle is forming (pink on chart, purple scenario).

A triangle here suggests the Sunday night bottoming megaphone within a megaphone is morphing into a continuation pattern.

ES Decision Point

ES Completed the Retrace to VWAP of its Sunday Night Megaphone Overnight

ES Completed the Retrace to VWAP of its Sunday Night Megaphone Overnight

ES completed the retrace to VWAP of its Sunday night megaphone (navy blue on chart) overnight.

Now it’s legal to take off upwards for breakouts from the navy, bright blue, and red megaphones.

Or, ES can plunge through VWAP of its navy blue megaphone for a trip to the megaphone bottom again, and likely on to the bottom of its red megaphone and 3-year price channel.