IWM is Back at its 3-Year Megaphone Top

IWM 3-Year Megaphone

IWM is Back at its Pink Megaphone Top & Needs to Put in At Least a Good Stab at a Retrace to VWAP

IWM is back at its pink megaphone top and needs to put in at least a good try at a retrace to its VWAP at 112 before continuing much higher.

The faster it puts in that retrace, the more likely it is to reverse there or above there and go a lot higher (orange and green scenarios).

If IWM breaks through the pink megaphone top and spends a long time forming a topping pattern there, it’s more likely to crash all the way to the pink megaphone bottom (purple scenario) after.

The chart looks in transition to me from a market that expected to top here to a market that now wants to extend a lot higher.

Working on the Top of the Top before a Trip to 2000

ES is Working on a Rising Megaphone Top for its Red Thanksgiving Price Channel

ES is Working on a Rising Megaphone Top for its Red Thanksgiving Price Channel

ES keeps traveling up its weak little Thanksgiving price channel (red), but it’s already started forming a rising megaphone top inside (gray). These formations tend to top with a head and shoulders that breaks out at the same time as the rising megaphone.

That would be a set-up for a short to at least the blue megaphones’ VWAP at 2125 and more likely the bottom of the navy blue megaphone at roughly 2000.

From 2000 ES would have to return to VWAP of the navy and bright blue megaphones for a decision on whether to melt-up to another new high (green scenario), reverse into a retest of the January/February lows (purple scenario–unlikely), or start a new megaphone across VWAP (pink scenario) that would likely ultimately form a triangle that would break out upwards.

The green or pink scenarios would be strong favorites because ES has a rising megaphone on its daily chart that it needs to complete with a strong move up to significantly higher highs.

ES Price Channel in Critical Decision Wave

ES has Confirmed a New Small Price Channel (Red), Now in its Critical Decision Wave

ES has Confirmed a New Small Price Channel (Red), Now in its Critical Decision Wave

ES has broken through 2184 in low-volume Thanksgiving week trading but it used a small price channel (red) to do it. The red price channel is now in its critical decision wave, where it either sets up a breakout into a melt-up (purple scenario) or starts a top.

Because ES failed to retrace to the orange megaphone VWAP before breaking out, it’s more likely to form a top (green scenario).  I drew a head and shoulders top on the channel, but the top could also form a megaphone, rising megaphone, or rising wedge.

IWM New Rising Megaphone Confirmed

With Its New All-Time High, IWM has Confirmed the Navy Blue Rising Megaphone

With Its New All-Time High, IWM has Confirmed the Navy Blue Rising Megaphone

With its new all-time high, IWM confirmed a new rising megaphone (red) within a second new rising megaphone (navy blue).

It needs a head and shoulders top inside the red rising megaphone before it can break out of both to start a top for the navy blue rising megaphone.  The process of forming that second top is likely to lead to confirmation of one last new rising megaphone (bright blue).

What this all means is that IWM is likely to work its way higher before a drop to the bottom of its range of the past few years and then a move up to another new high.

Another way of looking at it is that IWM continues to work on a giant megaphone across 113 that it began in late 2013 and that it will be working on for some years to come.