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