ES pushed a feeler through the top of the megaphone it’s been forming for a year (see yesterday’s post) but without really breaking out through the top.
And IWM looks like it’s going to continue down to the bottom of its bright blue topping megaphone, suggesting ES may have another leg down coming too.
IWM is closing in on the bottom of its pink rising megaphone, which means we’re getting close to a breakdown to at least the red megaphone VWAP. The IWM top before that move could even already be in.
IWM could go all the way for its red megaphone bottom on this dip, but if it does it’s a strong favorite to make another trip to its top after.
And this blue topping megaphone, with its precise reverses on the red megaphone top, increases the odds of a reversal at or near the red megaphone VWAP for a breakout upwards into a 50-point melt-up.