QQQ is Trying to Break Down

QQQ is Trying to Break Down Through Its Orange Megaphone VWAP and Light Blue Megaphone Top

QQQ is Trying to Break Down Through Its Orange Megaphone VWAP and Light Blue Megaphone Top

QQQ is trying to break out through its orange megaphone VWAP for a trip to the bottom of the red rising wedge (green scenario).

If opex trading holds the line here, expect another surge to new all-time highs to complete a cop.  The faster the top, the more likely QQQ is to reverse at the light blue megaphone VWAP for a huge move up.

The slower and bigger the top, the more likely QQQ is to go for the light blue megaphone bottom.

SPY Small Price Channel Set-Up

SPY Price Channel in Rising Megaphone at Top of Larger Price Channel

SPY Price Channel in Rising Megaphone at Top of Larger Price Channel

Yesterday I posted a likely rising megaphone topping pattern (orange on chart above) on a year-long SPY price channel.

Today I wanted to show you a smaller price channel (orange) along the bottom of that orange rising megaphone.

SPY broke the top of that little price channel on June 2nd in the channel’s critical decision wave, where the price decides whether to break out into a melt-up or start a top.  SPY then put in a nice partial pullback into the channel.

Today SPY is poking through the channel top again.  This is where the melt-up set-up (green scenario) lives or dies.

SPY has to either get going screaming higher–and pronto–or it’s electing to form a channel top (purple or blue scenario).  The blue scenario should have been connected to the first purple wave down, not the second.  SPY could also form a rising megaphone or rising wedge for the little channel top.

Whatever little top the channel forms, it should also in the end work out to a head and shoulders top on the orange rising megaphone.

 

SPY Price Channel Likely Top

SPY's Pink Price Channel Set Up in 2016 but Failed to Break Out When It was Supposed to in December

SPY’s Pink Price Channel Set Up in 2016 but Failed to Break Out When It was Supposed to in December

SPY confirmed the pink price channel on November 21, 2016 when it broke out past the previous channel high on August 23, 2016.  SPY was then in its critical decision wave for the channel.  That’s where the price either sets up a breakout into a melt-up or starts a top.

What SPY did was tag the channel top, pull back a little, and then fail to break out decisively (a breakout within a melt-up set-up would have looked like the purple scenario).

You often see this when the channel is forming a rising wedge (green scenario) or rising megaphone (orange scenario) top across the price channel top.  The rising megaphone scenario is the favorite.

Look Where QQQ Paused

QQQ has Broken Out of Its Red Topping Megaphone and is Paused at the Navy Megaphone VWAP

QQQ has Broken Out of Its Red Topping Megaphone and is Paused at the Navy Megaphone VWAP

QQQ has broken out of a topping megaphone (red) on the top of a larger megaphone (navy blue) and is now paused at the navy blue megaphone VWAP.

Because QQQ broke through the navy blue megaphone top to form a topping pattern, and because there’s a Neely set-up for a deep retrace of the move out of the August 2015 crash low, QQQ should go for the navy blue megaphone bottom.

QQQ should Bounce at Roughly the Red Rising Wedge Bottom to Retest the Navy Blue Megaphone VWAP Before a Breakout Downwards to the Red Wedge Bottom

QQQ should Bounce at Roughly the Red Rising Wedge Bottom to Retest the Navy Blue Megaphone VWAP Before a Breakout Downwards to the Red Wedge Bottom

QQQ should bounce off the bottom of the red rising wedge and navy blue megaphone bottom to retest the navy blue megaphone VWAP before continuing down to the critical decision point at the red wedge bottom.

If QQQ has a genuine breakdown through 100, next target is roughly 70.