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.