Rising Megaphone Upward Breakouts

DIA Long-Term Rising Megaphone with Price Channel Set-Ups

DIA Long-Term Rising Megaphone with Price Channel Set-Ups

Yesterday I posted DIA’s rising megaphone with a classic megaphone/head and shoulders topping and retrace scenario (above).

GLD Put in a Classic Top Before Retracing to Its Red Rising Megaphone Bottom

GLD Put in a Classic Top Before Retracing to Its Red Rising Megaphone Bottom

Gold put in a similar top before retracing to its red rising megaphone bottom. If it can break out through the bottom here, it will retrace to the red rising megaphone bottom.

AMZN Broke Out Upwards from its Blue Rising Megaphone

AMZN Broke Out Upwards from its Blue Rising Megaphone into a Rising Wedge

But rising megaphones don’t always complete in the classic way.  There are ways they can extend.  For example, AMZN failed to break out its blue rising megaphone bottom.  Instead it broke out the top and converted a classic head and shoulders top on the rising megaphone into a huge rising wedge top (red).

It will likely form a megaphone up here to complete the rising wedge.  This megaphone could break out in either direction once it completes.

AAPL Extended its Toop on the Blue Rising Megaphone

AAPL Extended its Top on the Blue Rising Megaphone

And AAPL, instead of breaking down through its blue rising megaphone bottom, converted its classic H&S top into a giant rising megaphone top that could extend as well.

These are not the only ways for rising megaphones to extend.  For example, any wave within a rising megaphone can extend to form an interior rising megaphone.  And a rising megaphone can put in a new high after breakout through the bottom, before retracing to its target, under certain conditions.

The point is that every topping formation can break out in either direction and every rising wedge or megaphone can break out in either direction.  There are always ways for moves to extend as the market gets new information that may challenge the assumptions that built a trading formation.

Big GDX Inverse H&S

GDX is Working on a Huge Inverse H&S

GDX is Working on a Huge Inverse H&S

GDX put in a price channeled move down into the June 2013 low. Because GDX broke out of the price channel after that low, the low was the start of a bottoming formation.

After the breakout from the channel, GDX put in a falling wedge into the head of a big inverse H&S.  Now GDX is working on the right shoulder for the big inverse H&S.

The problem is that GDX also needs a pullback to the VWAP of the bright blue megaphone.  That means a retest of the 2016 low.

GDX also needs a bounce from right about here to retest the top of the bright blue megaphone from inside.

The green scenario represents a quick retest of the top of the bright blue megaphone before a collapse to the megaphone VWAP to complete the right shoulder on the inverse H&S before breakout.

The purple scenario represents buyers getting too eager too soon.  If GDX breaks back out through the bright blue megaphone top before its retrace to the megaphone VWAP, it will likely form a megaphone right shoulder on the big inverse H&S to work the price back to VWAP before breakout.

TWTR Rising Wedge

TWTR has Completed a Rising Wedge Back to its Navy Blue Megaphone VWAP

TWTR has Completed a Rising Wedge Back to its Navy Blue Megaphone VWAP

TWTR has completed a rising wedge within its red megaphone on a retrace to its navy blue megaphone VWAP.  But the recent high was an exact touch on the rising wedge top.  That means we’ll see a topping or continuation pattern here.

A continuation pattern (purple scenario) would have to work the price back to the red megaphone VWAP before blast-off to a new high for the navy blue megaphone.  A topping pattern (green scenario) would make the navy blue megaphone legal for a breakout downwards.

The rising wedge makes the green scenario the favorite.

TWTR Green Scenario on the Daily would Mean a Breakout from a Flat-Bottomed Megaphone (Pink) with a Neckline at 13.50

TWTR Green Scenario on the Daily would Mean a Return to a the 13.50 Neckline of a Flat-Bottomed Megaphone (Pink)

The green scenario implies a trip back at the bottom of a flat-bottomed megaphone (pink on chart) on the daily. The formation’s neckline is at roughly 13.50 at the bottom of the navy blue megaphone.  ES could bounce there for a new high within the pink megaphone (orange scenario).  Or ES could break out through the neckline with a technical target just below 2.00.

GRUB Needs to Retrace to Retest of January Low

GRUB has Broken Out of a Topping Megaphone (Blue) and Needs to Retrace to the Red Megaphone VWAP (Ultimately Retesting the January Low)

GRUB has Broken Out of a Topping Megaphone (Blue) and Needs to Retrace to the Red Megaphone VWAP (Ultimately Retesting the January Low)

GRUB’s CEO made headlines last week telling Trump supporting employees to hit the road.  That started a boycott of the company on social media.

But GRUB had been working on a topping megaphone since early September (blue on chart).  Its minimum retrace target is the red megaphone VWAP at roughly 27.60, and any bottoming pattern there will likely retest the January low.

The short-term set-up is a flat-topped megaphone with a neckline at 39.20.  An upwards breakout through that neckline would mean GRUB is going to retest the top of its red megaphone from inside before continuing down to VWAP (purple scenario).

A downwards breakout from that megaphone would take GRUB in a fast move to 27.60, where it would likely start to megaphone (green scenario).

IBB Working on Head of Head and Shoulders

IBB is Working on the Head of a Head and Shoulders across the Blue Rising Megaphone Top

IBB is Working on the Head of a Head and Shoulders across the Blue Rising Megaphone Top

IBB is working on the head of a head and shoulders across its blue rising megaphone top.  The top of that head could be in already.

The blue rising megaphone is a topping pattern on the pink rising megaphone top, which is a topping pattern on a still larger rising megaphone (silver).

The combo of rising megaphones should make for a beautiful set of nested head and shoulders patterns (the right shoulder of the largest H&S isn’t drawn on the chart).  These tend to be good for big slow-motion collapses, but you always have to watch for right shoulder failures (on new Fed stimulus or the like) as it unfolds.

GS Rising Wedge Top Across Major Megaphone VWAP Signals Major Top

Rising Megaphone Top

GS Rising Wedge (Pink) Across VWAP of Major Megaphone (Orange) is Bearish

GS is putting in a rising wedge top across a major megaphone VWAP.

That’s one of the most bearish signals I’ve got.

There’s a VWAP of a still larger megaphone down at 90 (light blue horizontal line).  Usually the price would retrace to there and form some kind of bottom across that level.

FXI Rising Megaphone Top within Long-Term Formations

FXI is Forming a Triangle or H&S Top Within a Rising Megaphone Top

FXI is Forming a Triangle or H&S Top Within a Rising Megaphone Top

FXI is forming a triangle or head and shoulders top within a rising megaphone top. The head and shoulders formation is more likely because of what’s going on in the long-term chart:

FXI is Forming a Megaphone (Bright Blue) Across VWAP of a Longer-Term Megaphone (Red)

FXI is Forming a Megaphone (Bright Blue) Across VWAP of a Longer-Term Megaphone (Red)

FXI is forming a megaphone (bright blue) across VWAP of a longer-term megaphone (red).  A megaphone across VWAP of a larger megaphone will often end up morphing into a triangle across VWAP (navy blue in chart).

A head and shoulders within the rising megaphone in the first chart above would get FXI back up to its bright blue megaphone top.  A reversal there would lead to completion of both the bright blue megaphone and navy blue triangle.

In theory the triangle could break out in either direction, but after a crash like the one that bottomed in late 2008, the triangle would usually break out downwards to retest the crash low.

Then you would expect a swing to the red megaphone top.

GPRO Fake Head and Shoulders Set-Up

GPRO has a Classic Megaphone Right Shoulder on its Potential Head and Shoulders

GPRO has a Classic Megaphone Right Shoulder (Orange) on its Potential Head and Shoulders – Sign of a Higher High Coming

GPRO had a potential head and shoulders top on its daily chart, but the right shoulder started megaphoning (orange on chart).

A right shoulder megaphone is almost always a sign that a higher high is coming. Usually this higher high will be the head of a head and shoulders that will actually break out downwards.

GPRO seems to be trying to form a bottom here (purple megaphone on chart).  A breakout upwards from any complete bottoming pattern would be a set-up to go long to the orange megaphone top for a new all-time high, and the wave up would usually be fast–a melt-up.

GPRO has a lockup expiration this week.