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.

Mini Gold Plunge Setting Up

Gold is Working on a Top Before a Plunge to the Bottom of the Gray Megaphone

Gold is Working on a Top Before a Plunge to the Bottom of the Gray Megaphone

Gold set up a legal upwards breakout from the pink megaphone inside the red rising megaphone.  The red rising megaphone is a topping pattern across VWAP of the big light blue megaphone that’s been forming since October 2o14.

That meant gold was legal to go stampeding up to a retest of the July 2016 high.  But instead, gold has gotten bogged down forming a topping pattern at the pink megaphone top.

That means gold is likely to reenter the pink megaphone for a plunge to its bottom near the red rising megaphone bottom.

Gold could be working on a topping pattern before a plunge all the way to the light blue megaphone bottom in the 700s (green scenario).  Or, more likely, it could continue to bog down in new megaphones across the 1233-1250 area as it completes a triangle (navy blue) that could break out in either direction (purple scenario).

You have to be careful about shorting here until gold actually breaks down from a complete topping pattern back into the pink megaphone.  Gold can take a long time to complete tops, even small ones.

QQQ Chart All Gnarled Up in Megaphones Again

QQQ Megaphones in Megaphones on 60-Minute Chart

QQQ Megaphones in Megaphones on 60-Minute Chart

QQQ is all gnarled up in megaphones for opex week.  Right now it’s megaphoning across VWAP of the red megaphone on the 60-minute chart.

The blue megaphone at the top of the red megaphone needed a retrace to VWAP and this morning’s little gap up took care of that.  Now the little orange megaphone needs a retrace to at least its VWAP at roughly 131, and it’s a favorite to go for the red and orange megaphone bottoms (green scenario) unless it gets bogged down in a new megaphone across 131 (pink scenario).

The pink scenario would usually mean a triangle is forming between the red megaphone high and low.

There is no fast escape from this muddle.  Any move to a new red megaphone high or low will require a retrace to 131 before a real breakout because of the interior megaphones.