QQQ confirmed a price channel melt-up set-up at its last trip to the bottom of the blue rising wedge on the daily chart. Now it’s maxed out its price channel roll-ups and is heading up into the start of a top.
QQQ can start the top on this melt-up anywhere inside the rising wedge or a little bit through its top. The only thing it can’t do is complete this rising wedge with an exact tag of the rising wedge top.
The top on this melt-up within the rising wedge can end with a megaphone, head and shoulders, triangle top or smaller rising wedge top. QQQ could even tag its blue rising wedge top, return to the rising wedge bottom, and then extend the blue rising wedge with two more higher highs between tags of the wedge bottom.
Once ES completes the blue rising wedge, it must retrace to at least the level of the lowest touch on its bottom. But it could correct a lot further.
When QQQ retraces to its blue rising wedge bottom it will also be putting in a mandatory retrace to the VWAPs (volume-weighted average prices) of two long-term megaphones (gray and navy on the chart above). If QQQ breaks out through those VWAPs, the next target would be the megaphone bottoms.
Ultimately QQQ must retrace to the bottoms of the blue and silver rising megaphones on the long-term chart above (the blue formation’s bottom is at 42). But QQQ could extend this move up (purple and rose scenarios) before completing that retrace.