ES continues to form its triangle (see yesterday’s post).
Neely sent out an email to non-subscribers saying that he’s expecting the top that’s forming now to lead to a big downwards trending move that starts in February or March. I won’t post his charts but his set-up translates into my green scenario in the chart below.
I’ve simplified the green scenario for clarity, but it would almost certainly put in a bounce off the neckline at roughly 1800 for a right shoulder on the potential head and shoulders top. The right shoulder would likely retest the bottom of the blue rising megaphone.
The green scenario is a classic megaphone right shoulder on the H&S that formed between September 2014 and roughly August 2015. Usually with a megaphone right shoulder you’d see a new high for the head on a larger H&S that will actually complete and break out downwards.
The purple scenario represents one last rising megaphone forming off the 2011 high and low. That rising megaphone is not required.
Note that Neely sees ES reaching almost 2400 before the big correction begins. That would likely mean a new high after a dip to roughly 2150 to complete the top of the top.
I’m starting my holiday today but I’ll be checking charts daily and will post next week if something important happens in ES/SPY, oil, gold, or the dollar. Otherwise I’ll see you January 3.