A New High in Gold Would Be A Melt-Up Set-Up

If Gold Takes Out the July 6 High it would Confirm a New Rising Megaphone (Red)

If Gold Takes Out the July 6 High it would Confirm a New Rising Megaphone (Red)

Gold is working on the right shoulder of a head and shoulders with a neckline at roughly 1310. The minimum target upon breakout would be the blue megaphone VWAP at 1130, but gold would be a strong favorite to make it back to the bottom of the orange megaphone at a little below 1000.

If instead gold puts in a right shoulder failure and upwards breakout from its H&S, it will be confirming a new rising megaphone (red on chart).  It will also be confirming a breakout from a jumbo inverse H&S bottom (blue neckline) on the daily chart.

The move after the breakout would typically be a melt-up.

The target would be the orange megaphone top, or roughly 1600, and if the move were to fizzle out lower we’d have plenty of warning.  Rising megaphones tend to fizzle out with a price twining up the bottom and they tend to top with head and shoulders formations.

DB is Likely to Take a Long Time Bottoming

DB has Started Megaphoning and is Unlikely to Form a Clean Inverse H&S Bottom within its Orange Falling Megaphone - That Means it is Likely to be Down Here a Long Time

DB has Started Megaphoning and is Unlikely to Form a Clean Inverse H&S Bottom within its Orange Falling Megaphone – That Means it is Likely to be Down Here a Long Time

DB had a potential set-up on its daily chart for a fast inverse H&S bottom within its orange falling megaphone. That bottom could have broken out into a melt-up to last October’s high.

But DB failed to pull the trigger on that set-up.  Instead it started to megaphone in the head of that potential inverse H&S.  That delay means DB is likely to take a long time forming a megaphone or double-headed inverse H&S bottom down here before a return to the October high.

DB is likely about half-way through a prolonged bottoming process.

TWTR Breakout

Flat-Bottomed Megaphone

TWTR has Broken Out of Its Blue Megaphone & Navy Blue Flat-Bottomed Megaphone with a Target of the Red Flat-Bottomed Megaphone Neckline

TWTR has broken out of two topping formations with a target of at least the neckline of the red flat-bottomed megaphone.

It could just slice right through the red neckline for a crash to a new all-time low, or it could bounce off the neckline before breakout to a new all-time low, or it could put in a small fake breakout and reenter the formation for a trip back to the local high.

If TWTR recrosses the bottom of the navy blue flat-bottomed megaphone before reaching the red neckline, it’s forming a larger megaphone top (orange scenario).

Assuming TWTR gets through the red neckline at some point, we’ll know more about targets and likely bottoming formations when we’ve locked in the high before breakout.

The Longer Before Breakout, the Bigger the Top

The Longer It Takes ES to Break Out of its Flat-Topped Triangle or Megaphone, the Bigger the Breakout Can Be

The Longer It Takes ES to Break Out of its Flat-Topped Triangle or Megaphone, the Bigger the Breakout Can Be

ES has morphed its flat-topped triangle into a larger flat-topped triangle (red). And it can still morph the larger triangle into a flat-topped megaphone (purple scenario).

The only difference it makes is that the longer ES moves sideways here, the farther away the top of the blue rising megaphone gets, which means the higher ES can go after breakout (I couldn’t fit the full purple scenario on the chart).

Also, note that the purple scenario would be unlikely to complete a head and shoulders inside the blue rising megaphone, which means that ES would likely put in a megaphone right shoulder and another new high after breakout.

Get Ready for a Prolonged Sideways Move

Get Ready for a Prolonged Sideways Move

ES is likely working on a topping formation before a move back to its February low (or below) to set up a larger topping formation on the daily and weekly charts.