Dollar Rising Megaphones Suggest Another New High Coming

DX Rising Megaphones

DX Rising Megaphones

The Dollar Index (DX) has put in a rising megaphone (pink) within a rising megaphone (blue on chart).

DX broke out of the pink rising megaphone without completing a proper head and shoulders top first and promptly began megaphoning.  That would usually mean a new high outside the pink rising megaphone.

In addition, DX topped in December/January with exact tags on the blue rising megaphone top.  That would usually mean a new high inside the blue rising megaphone before breakout.

Plus the blue rising megaphone now has a beautiful head and shoulders top inside it.  Unfortunately, the right shoulder is not a bounce off the rising megaphone bottom.  Instead it’s a megaphone right shoulder (navy blue), which would usually mean a new high is coming for the head of a larger H&S top.

It all adds up to a likely new high for DX before a move to the blue rising megaphone bottom.  The new high will likely come after another false break of the red H&S neckline.

ES Trying to Top

ES is Back Inside Its Blue Rising Megaphone, Has Put in a New High Inside, and Is Trying to Work its Way to its Bottom for Breakout

ES is Back Inside Its Blue Rising Megaphone, Has Put in a New High Inside, and Is Trying to Work its Way to its Bottom for Breakout

ES has reentered its blue rising megaphone and made a new high inside after reentry.  That’s classic.

Now it is trying to work its way back to the formation bottom to complete a head and shoulders top and break out of it (green scenario).

ES never retested 2300 after breaking out through it, and would usually retest that level sooner rather than later.  And 2300 is inside the red megaphone.  That means when ES reenters the megaphone for the retest it will likely not break back out of the megaphone but instead follow through with a trip to the megaphone bottom.

So there’s a decent chance ES is topping right here (green & pink scenarios).

But ES has also left itself plenty of outs if it wants to extend the blue rising megaphone (orange scenario).  And when the first two waves of a rising megaphone are as close together as those in the blue rising megaphone, the formation usually extends.

Also, the technical target for the upwards breakout from the head and shoulders on the daily chart is roughly 2400.

So there’s a good chance that ES will put in at least a retest of the red megaphone top from here.  If it reenters the formation, it’s a set-up to short.  If not, ES will be moving up fast into the head of a H&S top sitting on top of the red megaphone.

Gold has Confirmed a Rising Wedge to 1250 Target

Gold has Confirmed a Rising Wedge (Blue) to its 1250 Retrace Target

Gold has Confirmed a Rising Wedge (Blue) to its 1250 Retrace Target

Gold needed a retrace to its purple megaphone VWAP at 1250, and it has just confirmed a rising wedge (blue on chart) as it reaches 1250.

Gold Rising Wedge to the Purple Megaphone VWAP Raises the Odds of the Purple Scenario

Gold’s Rising Wedge to the Purple Megaphone VWAP Raises the Odds of the Purple Scenario

While gold could break out upwards from the rising wedge (pink scenario), it’s most likely to break out downwards to either start a series of megaphones-inside-megaphones across 1200 (green scenario) or start a plunge to the bottom of the big red megaphone on the chart (purple scenario).

The green scenario would ultimately form a triangle that could break out in either direction–up for a breakout from an inverse head and shoulders with a triangle right shoulder, or down for a trip to the red megaphone bottom.

Gold could also use the green scenario to stay near 1200 for years.  In that case, it would break out upwards from the green triangle but only to the top of the red megaphone, where it would reverse to complete a large megaphone right shoulder on gold’s potential inverse H&S.