QQQ Maxes Out Price Channel Melt-Up

QQQ is Maxing Out the Price Channel Melt-Up Set-Up Inside Its Blue Rising Wedge

QQQ is Maxing Out the Price Channel Melt-Up Set-Up Inside Its Blue Rising Wedge

QQQ confirmed a price channel melt-up set-up at its last trip to the bottom of the blue rising wedge on the daily chart.  Now it’s maxed out its price channel roll-ups and is heading up into the start of a top.

QQQ can start the top on this melt-up anywhere inside the rising wedge or a little bit through its top.  The only thing it can’t do is complete this rising wedge with an exact tag of the rising wedge top.

The top on this melt-up within the rising wedge can end with a megaphone, head and shoulders, triangle top or smaller rising wedge top.  QQQ could even tag its blue rising wedge top, return to the rising wedge bottom, and then extend the blue rising wedge with two more higher highs between tags of the wedge bottom.

Once ES completes the blue rising wedge, it must retrace to at least the level of the lowest touch on its bottom.  But it could correct a lot further.

When QQQ Retraces to Its Blue Rising Wedge Bottom, It's Also Retracing To the VWAPs of Two Megaphones & Could Collapse to Their Bottoms

When QQQ Retraces to Its Blue Rising Wedge Bottom, It’s Also Retracing To the VWAPs of Two Megaphones (Gray & Navy) & Could Collapse to Their Bottoms

When QQQ retraces to its blue rising wedge bottom it will also be putting in a mandatory retrace to the VWAPs (volume-weighted average prices) of two long-term megaphones (gray and navy on the chart above). If QQQ breaks out through those VWAPs, the next target would be the megaphone bottoms.

Ultimately QQQ must retrace to the bottoms of the blue and silver rising megaphones on the long-term chart above (the blue formation’s bottom is at 42).  But QQQ could extend this move up (purple and rose scenarios) before completing that retrace.

QQQ Price Channel vs Rising Wedge Set-Ups on 60-Min Chart

QQQ is Either Putting in the Second Pullback of a Rising Wedge Top  or a Pullback within the Red Price Channel Before a Move into the Start of a Top

QQQ is Either Putting in the Second Pullback of a Rising Wedge Top or a Pullback within the Red Price Channel Before a Move into the Start of a Top

QQQ is pulling back from a pierce of the red price channel top. The red price channel is a roll-up acceleration price channel launched from the blue confirmed price channel.

Because QQQ pierced the red channel top, it’s not likely to retrace all the way to the channel bottom before breaking out to a new high through the red channel top.

That means the next wave up will put a rising wedge top on the 60-minute chart.  With both the price channel set-up and the rising wedge set-up, QQQ is likely to complete this move up with either an extension of the rising wedge or a sideways topping formation like a head and shoulders top or a megaphone top.

QQQ is Completing a Larger Rising Wedge (Purple) within a Megaphone (Navy Blue) on the Daily Chart

QQQ is Completing a Larger Rising Wedge (Purple) within a Megaphone (Navy Blue) on the Daily Chart

QQQ’s rising wedge on the 60-minute chart is an extension of a rising wedge on the daily chart (purple on chart above).  Rising wedges have a technical retrace target of the lowest touch on the formation bottom.  They don’t always put in that full retrace, but because this rising wedge has occurred within a confirmed megaphone (navy blue), QQQ is a strong favorite to put in that retrace.

That’s because megaphones almost always retrace to VWAP (the megaphone volume-weighted average price) before breakout.

QQQ could also pull back all the way to the navy blue megaphone bottom.

QQQ Rising Megaphones on Daily/Weekly Charts

QQQ Rising Megaphones on Daily/Weekly Charts

QQQ is completing the blue rising megaphone on the daily/weekly charts and will eventually have to retrace to the formation bottom (the green scenario would be a classic way to do this).

But QQQ could extend this move up by confirming the orange rising megaphone.  The purple scenario would be a classic way to do that.

QQQ Rising Wedge

QQQ has Broken Out of its Blue Price Channel into the Red Roll-Up Price Channel within the Navy Rising Wedge

QQQ has Broken Out of its Blue Price Channel into the Red Roll-Up Price Channel within the Navy Rising Wedge

QQQ has made a legal breakout from its blue price channel into the red roll-up price channel within the navy blue rising wedge.  It’s already pierced the top of its red channel, so that makes a partial pullback and move up into the start of a top (green scenario) most likely.

The green scenario would usually be capable of much more of a final melt-up, but I’m assuming it will be limited by the top of the navy rising wedge.  The green scenario does not have to top with a megaphone–it could extend this move up with something like a rising wedge top for an extended navy blue rising wedge.

The alternate purple scenario represents QQQ putting in the head of a head and shoulders top for the blue price channel.

When QQQ completes the navy blue rising wedge it will also be completing a wave up within the orange megaphone.  The retrace target for the navy rising wedge is the formation bottom, which is at roughly the orange megaphone VWAP (volume-weighted average price).

QQQ could reverse at that VWAP after a bottoming pattern that tags a larger megaphone’s VWAP at roughly 97.60.  Or it could continue down through the orange megaphone VWAP to the megaphone bottom.

The likelihood of a turn at VWAP vs collapse to the megaphone bottom will be determined by how long it takes QQQ to top before that trip down.

QQQ Extended Rising Wedge Top

QQQ is Forming an Extended Rising Wedge Top

QQQ is Forming an Extended Rising Wedge Top

QQQ is working on a rising wedge top (navy blue) on a price channel top (blue) for a large rising wedge top (red) that it’s been working on for almost a year.

Once an extended rising wedge breaks out downwards, the move down is usually fast.

QQQ is Working on a Top for this Wave within the Navy & Orange Megaphones & Needs a Retrace to at Least the Navy Megaphone VWAP at Roughly 100

QQQ is Working on a Top for this Wave within the Navy & Orange Megaphones & Needs a Retrace to at Least the Navy Megaphone VWAP at Roughly 100

The red rising wedge is a topping pattern for this wave up within the navy blue and orange megaphones in the long-term chart above.

The red rising wedge is also completing the head of a head and shoulders top for the silver rising megaphone.  That H&S top is a strong favorite to break the price out of the silver rising megaphone to at least the bottom of the blue rising megaphone.

The bottom of the blue rising megaphone will be a long-term critical decision point.

QQQ could bounce off the bottom to take out the high of the right shoulder of the silver rising megaphone’s H&S, turning that right shoulder into a megaphone.  A megaphone in this spot would likely launch another interior megaphone across the navy megaphone VWAP (Volume-Weighted Average Price) to put a big continuation triangle in the blue rising megaphone for a move to new highs (purple scenario).

The green scenario represents a retrace to the orange megaphone VWAP to complete it before taking QQQ down to the navy megaphone bottom and breaking it out of the blue rising megaphone.

QQQ would then retrace to the navy megaphone VWAP and blue rising megaphone bottom for the big decision on whether to put in a trip to another new high vs crash to the blue rising megaphone bottom.

QQQ Price Channel is Working on a Megaphone Top

QQQ is Likely Working on a Megaphone Top for the Red Price Channel

QQQ is Likely Working on a Megaphone Top for the Red Price Channel

QQQ is working on a megaphone after confirming the red price channel. The price channel has been a move up the bottom of a rising wedge, so the megaphone is a strong favorite to eventually break out downwards.

QQQ is Working on Tops for Some Long-Term Rising Megaphones (Blue & Silver)

QQQ is Working on Tops for Some Long-Term Rising Megaphones (Blue & Silver)

QQQ is working on tops for two long-term rising megaphones (blue and silver on chart) and needs to retrace to the formation bottoms.  A fast top here (green scenario) could set up clean head and shoulders tops for both rising megaphones.

The green scenario could break QQQ out of both into a crash to the blue rising megaphone bottom (orange scenario).

The alternate green scenario is that QQQ reverses near the pink megaphone bottom to form one last larger rising megaphone after breakout from the blue one for a fast move to another new all-time high.

The purple scenario represents a slower topping process in which QQQ morphs the move off the February 2016 low into a rising megaphone top (navy blue).  The slower top would virtually guarantee a more complicated and drawn-out correction to break QQQ out of the blue rising megaphone.  This type of breakout would virtually guarantee a move to another new all-time high before the retrace to 42.

Lackluster Bounce for QQQ Off Potential Rising Wedge Bottom

QQQ has Put in a Lackluster Bounce Off the Bottom of its Potential Bright Blue Rising Wedge

QQQ has Put in a Lackluster Bounce Off the Bottom of its Potential Bright Blue Rising Wedge

QQQ has put in a lackluster bounce off the bottom of its potential bright blue rising wedge.  QQQ has a head and shoulders pattern drawn on the move out of the June 27 low and is trying to get back to its neckline (red).

Although QQQ could zoom up to a new high from here to confirm the rising wedge, it’s more likely to kill that blue rising wedge with a breakdown through its bottom in which it also puts in a break through the red H&S neckline.

This is a perfect spot and time of year for a megaphone right shoulder on the H&S that would turn most of 2016 into a rising megaphone top (green scenario).  The rising megaphone would usually complete with a head and shoulders top that breaks out at the same time as the rising megaphone for a fast move down to at least its bottom.

 

QQQ Long-Term Rising Megaphones

QQQ is Working on Topping Patterns for Two Long-Term Rising Megaphones

QQQ is Working on Topping Patterns for Two Long-Term Rising Megaphones

QQQ is working on a topping pattern for a move within a larger topping pattern within a still larger topping pattern.  It’s forming major tops for two multi-year rising megaphones on the daily/weekly charts (blue and red on chart).

All topping patterns are tricky to trade because it’s so common for them to morph into different topping patterns.  Rising wedges constantly morph into rising megaphones, head and shoulders patterns morph into megaphones, triangles morph into H&S tops and megaphone tops morph into rising megaphone tops.

There is nothing to be done about this but wait for a topping pattern to complete in such a way that a price is a favorite to get moving down on a move that’s likely to be big enough to offer a decent reward on a trade.  Until then you stay long or get long on upwards breakouts from consolidations within the patterns.

So, while QQQ could form a small quick megaphone or H&S top here that is the top before a move that takes the price back to 40 (green scenario), QQQ could also shoot up higher to complete a rising wedge or rising megaphone top before that move, and it could postpone that move by forming a larger megaphone top up here (purple or pink scenarios).