Crashes Don’t Start on Technical Trading
IWM keeps reversing on exact touches of its 3 1/2 year red megaphone top. It could do that all the way to a breakout from the pink rising megaphone.
If it does, the green or blue scenarios become the favorite. Great crashes don’t start on exact reversals from important lines.
If IWM can break through the red megaphone top by enough to form a topping pattern up there, it becomes a favorite to go all the way for the red megaphone bottom after it completes a top and breaks out of the pink rising megaphone.
Potential Set-Up for One of the Great Bull Markets of All Time
Note that the green scenario’s reversal at the red megaphone VWAP would lead to either a second trip to the red megaphone top before a crash to its bottom, or a genuine breakout from the red megaphone (blue scenario) with a technical target of at least 200, and the breakout could lead into one of the great bull markets (or bubbles) of all time.
The blue scenario would essentially convert the red megaphone into a giant Sornette melt-up set-up.
I posted a few days ago that Neely is looking for a market crash. When you have a set-up for a crash, and the market won’t crash, that’s a great set-up for a melt-up.