IWM is Back at the Top of its 3-Year+ Megaphone

IWM Must Work Its Way Across the Navy Blue Rising Megaphone Before it can Correct

IWM is Back at the Top of its 3.5-Year Red Megaphone, Working Its Way Across the Navy Blue Rising Megaphone

IWM is Back at the Top of its 3.5-Year Red Megaphone, Working Its Way Across the Navy Blue Rising Megaphone

IWM is back at the top of the big red megaphone it began forming at the end of 2013. It needs to retrace to at least the red megaphone VWAP.

In order to correct to at least the red megaphone VWAP, it must work its way across the navy blue rising megaphone while forming a head and shoulders or megaphone top.

IWM has Formed a H&S Top with a Megaphone Right Shoulder

Right now there’s a flat-bottomed megaphone top on the chart, which is also a head and shoulders top with a megaphone right shoulder.  But IWM needs to complete a conventional head and shoulders with a right shoulder that’s a bounce off the navy blue rising megaphone.  Otherwise it complete a megaphone top after breaking out the bottom of the navy blue megaphone.

This process will eat up more time and IWM could cross the red megaphone top while it’s doing it.

IWM may be Stuck in the Red Megaphone for Years to Come

The big red megaphone is part of the topping process of a series of longer-term rising megaphones inside rising megaphones.  Sooner or later, IWM must retrace to the bottom of these rising megaphones.  There’s a great chance it will do that without ever leaving the red megaphone.

DX Megaphone Update

DX is at the VWAP of a Multi-Decade Megaphone and Would Like to Stay There

The Dollar is at VWAP of a Multi-Decade Megaphone

The Dollar is at VWAP of a Multi-Decade Megaphone

DX is at VWAP of a multi-decade megaphone (red in chart above) and would prefer to never leave. At the same time, it’s got to retrace part of its 2014-’15 melt-up. The best way to meet both objectives is with a megaphone (blue in chart below).

DX Blew Its Chance at a Fast Top when it Completed an H&S Inside the Navy Blue Rising Megaphone Too Early

DX has Completed a H&S Top Inside its Navy Blue Rising Megaphone, But Too Soon - Means More Megaphoning is Likely

DX has Completed a H&S Top Inside its Navy Blue Rising Megaphone, But Too Soon – Means More Megaphoning is Likely

Right now DX is trying to complete a top within the red megaphone before a trip to its bottom to set up the larger blue megaphone.

DX put in a nice rising megaphone (navy blue on chart) to get up to the red megaphone top, but it needs a bit higher of a high to draw the blue megaphone properly.  So what DX has done is complete a head and shoulders top on the navy blue rising megaphone too early.

That Likely Means Prolonged Megaphoning Up Here

The strongest topping set-ups on rising megaphones are H&S formations with a right shoulder that’s a bounce off the rising megaphone bottom.  DX, because it put in its H&S right shoulder bounce inside the formation, is now morphing that right shoulder into a megaphone.

H&S megaphone right shoulders usually mean a squeaker new high to form a larger H&S or megaphone top.  Because DX has put off the pop to a squeaker new high so long, it’s unlikely to complete a larger H&S top inside the navy rising megaphone.  That means we’re likely to see prolonged megaphoning up here before the trip to the red megaphone bottom.

That will allow the trip to the red megaphone bottom to put in the entire retrace needed of the 2014-’15 melt-up.  Then DX can return to the red/blue megaphone VWAP and continue moving sideways.  Or it can return to the red/blue megaphone top to set up a potential breakout upwards.

QQQ Rising Megaphones & Attempt at a Top

QQQ Rising Megaphones at This Point Almost Guarantee New HIghs After a Dip

QQQ Rising Megaphones at This Point Almost Guarantee New HIghs After a Dip

QQQ is approaching its navy blue rising megaphone top and is megaphoning its way to a tag of that top.  It’s approaching that top within the gray interior rising megaphone.

The Navy Blue Line is the Top of QQQ's Long-Term Rising Megaphone

The Navy Blue Line is the Top of QQQ’s Long-Term Rising Megaphone

QQQ has Just About Locked in a Scenario of Rising Megaphone Extensions

Both the gray rising megaphone and navy rising megaphone require a head and shoulders top to complete, with right shoulders that are bounces off the rising megaphone bottoms.  After a topping pattern like that, a breakout from a rising megaphone would usually mean a fast correction to its bottom.

QQQ also requires a dip to the VWAPs of the big red and orange megaphones on the daily chart before it can break out upwards from those megaphones.

So QQQ is a strong favorite to put in a significant dip fairly soon.

But QQQ has just about run out of time for getting back to those VWAPs in time to complete a proper head and shoulders top inside the gray rising megaphone.

QQQ would have to collapse from a fast tag of that navy blue line (green scenario) to have any chance of getting back to the gray rising megaphone bottom in time to complete a proper head and shoulders inside it.  But a high that was an exact tag of the navy line would virtually guarantee that QQQ would extend this move rather than break out of the rising megaphones and collapse.

That means QQQ is a favorite to head up to a new all-time high from the red megaphone VWAP once it finally gets down there (green scenario in top chart).  In the unlikely event QQQ corrected all the way to the megaphone bottoms (purple scenario on the daily), it would be a favorite to melt up to the megaphone tops after.

Note that the green scenario as drawn is just a rough idea of how this will play out.  The real scenario could play out much differently.  Specifically, I doubt we’d see the big red megaphone VWAP again.

A more realistic green scenario will be easier to draw after QQQ finally tops for the required dip to the red megaphone VWAP.

ES Flat-Topped Triangle is Now the Fav

ES is Probably Going for a New All-Time High to Redraw its Red Megaphone Top

ES is Probably Going for a New All-Time High to Redraw its Red Megaphone Top

ES is at the top of its navy blue megaphone trying to reach the top of its light blue megaphone inside the orange rising wedge.

Both megaphones require a retrace to VWAP at roughly 2350 to be legal for a breakout upwards, but even if ES goes straight for the red megaphone top, it will need a retrace to the red megaphone VWAP to be legal for a breakout from that.

The green scenario (a flat-topped triangle) is the favorite for now, with the warning that the triangle could fail to complete and ES could go straight for the red megaphone top and through it by roughly the same amount as the March 1 spike to redraw it.

The purple scenario is a gesture to remind you that megaphones inside megaphones can produce all kinds of short-term erratic moves.  Also, at any time we could see a price channel or Sornette melt-up set-up form.

At this point I expect ES to redraw the red megaphone and be stuck in it for a long time.

We could also see ES draw a flat-topped descending-bottom megaphone on the chart.  That would be the purple scenario with another wave down to the formation bottom.