Red Flat-Bottomed Megaphone
The technical target for the ES upwards breakout from its big head and shoulders is roughly 2400. But ES also has a giant flat-bottomed megaphone (red) on the weekly chart, and ES could go all the way for its top on this move.
Orange Rising Megaphone
However, ES has formed a rising megaphone (orange) on the way up out of its early 2016 low, and it has just reached the top of that formation. Moves like this don’t end on an exact touch on a formation top, so ES will either pull back here and put in a new high inside the rising megaphone, or it will break through the top to put in a topping pattern on its top.
Mandatory retrace to 2150
ES has a mandatory retrace requirement at 2150 (from megaphones discussed in earlier posts), which happens to be at the orange rising megaphone bottom if ES gets there fairly soon. If ES breaks down through 2150, it will also be breaking out of the orange rising megaphone, setting up a trip to at least its bottom but more likely the bottom of the red flat-bottomed megaphone.
Big Moves Ahead
If ES reverses on the dip to 2150 and puts in a new high, it will be redrawing the orange rising megaphone for a huge move. Any breakout to another new high before a small breakout through the red megaphone bottom would be an upwards breakout from the red flat-bottomed megaphone with a target roughly 600 points higher.
If ES instead makes it to the bottom of the red flat-bottomed megaphone, it can either break out into a crash with a technical target 600 points lower, or it can put in a fake breakout that reenters the flat-topped megaphone with a target of a small new high in the formation.
Other Formations Confirm
I’ve been posting for months on other trading formations (megaphones and rising megaphones) on the ES long-term charts. Those trading formations confirm the set-ups and targets from the trading formations discussed above.