ES is bogged down in a megaphone (gray) across VWAP (the volume-weighted average price) of the red megaphone. ES was legal for a downwards breakout from the gray megaphone to roughly 2300, but got stopped by the March 27 low.
Now ES is back at the gray and red megaphone VWAP and a critical decision point.
The Triangle Set-Up
ES could start a new megaphone across the gray and red megaphone VWAPs. That would almost certainly mean the orange triangle is going to complete (pink and navy scenarios). It could break out in either direction, but a upwards breakout would be stopped by the red megaphone top, while a downwards breakout would target at least 2150 and could go all the way to 1800 or even year-2011 territory.
The Sornette Melt-Up Set-Up
If ES tries to form a megaphone across the red megaphone VWAP and then breaks out of it upwards without a retrace to VWAP it’s a Sornette melt-up set-up. This would mean a fast move to the area of the gray and red megaphone tops (purple scenario).
The Falling Megaphone Set-Up
If ES forms a quick head and shoulders top at the red megaphone VWAP and then plunges down to take out March 27 low, it’s confirming the blue falling megaphone (green scenario).
The falling megaphone would usually bottom with an inverse head and shoulders that tags or crosses 2300 before putting in a right shoulder pullback from the falling megaphone top. When the price breaks out of the blue falling megaphone and inverse H&S, it would be a strong set-up for a move to at least 2390 and almost certainly a new all-time high at the red megaphone top.