ES Rising Megaphone Extensions

Long Term ES is Forming a Set of Rising Megaphones In Rising Megaphones

Long Term ES is Forming a Set of Rising Megaphones In Rising Megaphones

Long term ES is forming a set of rising megaphones inside rising megaphones.  Right now it’s working on the pink rising megaphone, and there is a brief window of opportunity for ES to plunge to its bottom, put in a right shoulder bounce, and then crash to the formation bottom at 1250.

But if ES eats up much more time before returning to the pink rising megaphone bottom, it won’t be able to complete a proper head and shoulders top inside it.  That would usually mean another new high outside the formation, which would confirm the silver rising megaphone.

And there’s an anchor for still another rising megaphone after that.

There’s still a triangle setting up on the 60-minute chart.  If that triangle breaks out downwards, the first target 2150.  ES could reverse there to extend the pink rising megaphone.  But if ES were to slice through 2150, the green scenario would be a strong favorite.

If the triangle breaks out upwards, there’s no way ES will get to the pink rising megaphone bottom in time for it to complete a proper top.  That would mean buy the dip on a break of that formation bottom for a trip to another new all-time high.

So ES has some dips coming.  But unless it gets moving down very soon, they’ll be buying opportunities.

 

Size Matters

The Key to this Top is the Orange Triangle

The Key to this Top is the Orange Triangle

ES is back inside the top of its navy blue year long megaphone, which is also a rising megaphone (gray bottom).

ES needs a retrace to the light blue megaphone VWAP and rising megaphone bottom to be legal for an upwards breakout from all of these trading formations.

ES could also correct all the way to the navy blue megaphone VWAP or bottom.  And after a retrace to the light blue megaphone VWAP, ES could break out downwards from the navy blue megaphone all the way to year-2011 territory.

The size of the impending correction depends on how big and prolonged a topping pattern ES puts in at the navy blue megaphone top.

The Orange Triangle is Key to the Next Trading Set-Up

ES is trying to form a triangle (orange on chart) across the navy blue megaphone top.  Right now, ES is likely heading up to retest the navy blue megaphone top from inside and redraw the orange triangle top line.

If ES completes the orange triangle and breaks out downwards from it, it’s likely going for the light blue megaphone VWAP at roughly 2150 and would be a favorite (though not guaranteed) to reverse there for a big move up (green scenario).

If ES instead breaks out upwards through the navy blue line again, it’s likely going for the red megaphone top to put a much bigger topping pattern on the navy blue megaphone (light blue scenario).

A big topping pattern here would likely lead to a correction all the way to the navy blue megaphone bottom.

If ES breaks out to the red megaphone bottom before completing the orange triangle, we’re likely in the orange scenario and ES could be stuck in the red megaphone for a long time.  The orange scenario would essentially redraw the rising megaphone on the chart.

Over the weekend I’ll post a super long-term chart that shows all the outs the market has left for itself here.

ES Trading Set-Ups

ES Red Megaphone vs Gray Megaphone vs Blue Falling Megaphone vs Orange Triangle

ES Red Megaphone vs Gray Megaphone vs Blue Falling Megaphone vs Orange Triangle

ES is bogged down in a megaphone (gray) across VWAP (the volume-weighted average price) of the red megaphone.  ES was legal for a downwards breakout from the gray megaphone to roughly 2300, but got stopped by the March 27 low.

Now ES is back at the gray and red megaphone VWAP and a critical decision point.

The Triangle Set-Up

ES could start a new megaphone across the gray and red megaphone VWAPs.  That would almost certainly mean the orange triangle is going to complete (pink and navy scenarios).  It could break out in either direction, but a upwards breakout would be stopped by the red megaphone top, while a downwards breakout would target at least 2150 and could go all the way to 1800 or even year-2011 territory.

The Sornette Melt-Up Set-Up

If ES tries to form a megaphone across the red megaphone VWAP and then breaks out of it upwards without a retrace to VWAP it’s a Sornette melt-up set-up.  This would mean a fast move to the area of the gray and red megaphone tops (purple scenario).

The Falling Megaphone Set-Up

If ES forms a quick head and shoulders top at the red megaphone VWAP and then plunges down to take out March 27 low, it’s confirming the blue falling megaphone (green scenario).

The falling megaphone would usually bottom with an inverse head and shoulders that tags or crosses 2300 before putting in a right shoulder pullback from the falling megaphone top.  When the price breaks out of the blue falling megaphone and inverse H&S, it would be a strong set-up for a move to at least 2390 and almost certainly a new all-time high at the red megaphone top.

ES Triangle vs Megaphone

ES has a Potential Price Channel (Navy Blue) Set-Up within a Redrawn Triangle (Orange) or the Red Megaphone

ES has a Potential Price Channel (Navy Blue) Set-Up within a Redrawn Triangle (Orange) or the Red Megaphone

ES has drawn a potential price channel (navy blue) or falling megaphone overnight.  A move down to a new low from here or right about here would confirm the channel or falling megaphone.

If a price channel is confirmed, ES would be in the channel’s critical decision wave between starting a bottom (green scenario) and setting up a meltdown (pink scenario).

The pink meltdown scenario is unlikely.  Although ES broke out of a legal triangle (orange) it is more likely to be redrawing that triangle than to actually have broken out of it unless the breakout is a move within the larger red megaphone.

If ES moves straight up from here instead, it is most likely redrawing the orange triangle, which could break out in either direction (purple or blue scenario).