AMZN Rising Wedge

A Super-Extended Move is a Neely Tell

AMZN is Now Coloring in the Top Third of the Red Rising Wedge

AMZN is Now Coloring in the Top Third of the Red Rising Wedge – A Neely Tell of a Major Top

AMZN is now coloring in the top third of the red rising wedge. That represents a super extended move and is a Neely tell of a major top forming.

AMZN could continue moving up the rising wedge, extending it into its very tip.  Or it could start a small fast megaphone inside the wedge to work the price to the wedge bottom before breakout into a crash from here.

Or it could extend the rising wedge into its tip then crash to the implied price channel bottom and make a new high from there before collapsing to the wedge bottom.

The first technical target for a correction is the rising wedge bottom at roughly 500.  Ultimately AMZN has to work its way back to the bottom of the purple rising megaphone at 100 as well.  But the route to that target could be very complicated and even include a new all-time high from 500 en route.

Unless some disaster is about to befall AMZN (like an antitrust suit and break-up), the most likely scenario is a drop to roughly the rising wedge bottom to establish a new megaphone trading range across roughly 600.  Some years down the road, from a new high, that megaphone could include a drop to 100.

XLE Megaphones with Potential Melt-Up Set-Up

XLE has a Potential Sornette Melt-Up Set-Up on its 60-Minute Chart

XLE has a Potential Sornette Melt-Up Set-Up on its 60-Minute Chart

XLE has formed a beautiful megaphone inside a megaphone on its 60-minute chart.  Even better, XLE has formed a potential Sornette melt-up launch pattern across VWAP of the red megaphone.

An upwards breakout through the navy blue megaphone VWAP, typically with a double bobble as the orange megaphone fails to retrace to VWAP, would target the red and blue megaphone tops.  The move would usually be fast (green scenario).

The light blue scenario represents a series of megaphones inside megaphones across the navy megaphone VWAP.  We’d usually see this is a triangle right shoulder is forming on the potential inverse head and shoulders bottom on the daily chart (see below).

The purple scenario represents a top before a collapse back to the 2016 (see below).

 

XLE Inverse H&S Bottom with Right  Shoulder Triangle vs Neely Set-Up

XLE Inverse H&S Bottom with Right Shoulder Triangle vs Neely Set-Up

XLE formed a price channel on its move down from the June 2014 high to the January 2016 low.  That kind of move is a Neely set-up for a partial retrace then retest of the low before a melt-up back to the all-time high (purple scenario).

The green scenario on the daily chart is a triangle right shoulder on the inverse H&S before a breakout to retest the all-time high.  It’s possible but unlike (because of the megaphones on the 60-minute chart) that XLE will break out of that inverse H&S without a triangle right shoulder.

The Neely set-up is the favorite longer-term.

ES Megaphone Welter

ES Red Flat-Topped Megaphone

ES Red Flat-Topped Megaphone vs Blue Megaphone

First, ES has nothing that even resembles a legal top on the daily chart yet.

Second, ES is trapped in a welter of megaphones inside megaphones within its trading range since the March 1 high. No way it escapes this mess easily.

ES has a kinda sorta flat-topped megaphone on the chart (red) and has put in a false breakout through its top at roughly the March 1 high.  That would usually mean a trip down to take out the formation low (green scenario) before a breakout through the top to morph the whole mess into the blue megaphone.

Or ES could still be working on getting straight to the area of the blue megaphone top (purple scenario).

There’s a small rising megaphone on the chart out of the April 17 low that didn’t top properly with a head and shoulders inside the formation.  That would usually mean we see another stab through 2400 even if the flat-topped megaphone is in play (orange scenario).

The proper attitude toward any move within the recent trading range right now is high skepticism.  The only exception would be if a price channel meltdown sets up.  No sign of that yet.

 

QQQ Rising Megaphone in Rising Wedge

QQQ has Formed a Rising Megaphone (Bright Blue) in its Red Rising Wedge

QQQ has Formed a Rising Megaphone (Bright Blue) in its Red Rising Wedge

QQQ is now creeping up the top of the red rising wedge it began forming a year ago.  It’s working on the top for a price-channeled move within the rising wedge, and has also formed a rising megaphone (bright blue) inside the wedge.

That blue rising megaphone counts as a way of extending the wedge.  An extended rising wedge is a strong favorite to correct to its bottom once it finally breaks down.

The rising wedge has carried QQQ to the top of a rising megaphone that began in 2010 as well as the navy blue megaphone that began forming in the summer of 2014.

QQQ needs to retrace to at least VWAP of the orange megaphone, which would take it to the bottom of the red rising wedge.  It’s a favorite to correct sooner or later to the bottom of the navy blue rising megaphone at roughly 42.

And QQQ could remain stuck in the navy blue megaphone for years to come.

QQQ Long-Term Chart

QQQ Long-Term Chart

I’ve drawn a smallish fast top on the navy blue megaphone, but tops like this can take months to form.

Note also that the green scenario is a simple, standard way for the navy blue rising megaphone to extend.  That is another trading formation that could extend for years, though usually we’d see a return to the formation bottom first.