ES has mini-plunged this morning through an important trend line on its 60-minute chart and is retesting a megaphone VWAP at roughly 2362.
It could turn up from here to another new all-time high. That is the pink scenario and it could go a lot higher than I’ve drawn. Any failure to reenter the navy blue line could result in a blow-off top. I’ll post new scenarios if that develops.
If ES can get through 2362, the critical decision point is at roughly 2350, which is both VWAP of the red megaphone on the chart and the top of the navy blue megaphone and rising megaphone or price channel. The 2350 level should be a strong magnet for ES on this mini-plunge.
If ES breaks down through 2350, it would usually go for at least 2150 and could go as far as 1800 and set up an even bigger correction from there.
Note that even if ES is going to reverse at 2350, it would usually break that level a little to form a bottoming formation. The question is whether ES can reenter that navy blue line.