False Breaks Usually Mean an Extension
ES is back outside of its navy blue megaphone top and back inside its orange rising megaphone bottom after false breaks through both. That would usually mean ES wants to extend the orange rising megaphone and put a bigger top on the navy blue megaphone.
A new high would confirm that the orange rising megaphone is an interior rising megaphone within the gray rising megaphone.
The green scenario on the chart above is more likely than the purple scenario. The green scenario could take the price a lot higher than drawn. The purple scenario is one of several possible ways ES could twine across the navy blue megaphone top for an extended time.
I’ve seen prices twine up a major megaphone top for months.
But the Extension hasn’t Triggered Yet
But ES has not yet broken through its blue megaphone VWAP at 2362 on the 60-minute chart, so technically it’s not yet set up for a move to a new all-time high or a twining move. We could see a small pullback from VWAP to put a right shoulder on an inverse H&S (green scenario). Or we could see a move down to retest the low and put a double bottom on an inverse H&S (orange scenario).
Or we could see ES put in a Sornette melt-up set-up at the blue megaphone VWAP (pink scenario). We could even see a failure to break out through 2362 and collapse (not drawn, because it’s unlikely).
Assuming ES breaks out upwards through 2362 one way or another, the minimum target is the blue megaphone top and the play is to stay long until ES breaks out of the new gray rising megaphone. The gray rising megaphone bottom doesn’t get officially drawn until ES hits a new all-time high.
A Market that’s Rethinking its Prospects
The market is essentially telling us it doesn’t know what to do. It had set up a major top for a big correction, and now it is glimpsing the potential of bullish prospects.
It should still retrace to 2150 at some point even if it’s destined to cancel out its major bearish set-ups and head up in a multi-year bull market.