ES has Put In an Inverse H&S Bottom, but with a Megaphone Right Shoulder that Requires a Retrace
ES has drawn an inverse H&S on its 2-minute chart, but with a megaphone right shoulder that would usually put in a retrace that would cancel this morning’s neckline breakout. (Note: the megaphone right shoulder is iffy and the price could just keep going to 2100, but it’s a pretty spindly looking wave.)
Megaphone right shoulders often mean a lower low is coming that would be the head of a larger inverse H&S or middle of a larger megaphone (purple scenario). But this megaphone right shoulder could also put in a lesser retrace to set up the pink price channel.
And if ES puts in a dip that turns at the bottom of the potential pink price channel, the next move would often be a breakout into a steeper melt-up channel (green scenario).
So the FOMC announcement (or lead up to it) either gives us a melt-up set-up or sends the market into a series of whipsaws that take the price to the bottom of the 3-year+ price channel before a hard move up to a new high.
Either way, the new high will be limited to the top of the orange megaphone discussed earlier today.
Note that the purple scenario would allow for a higher new high, as the orange megaphone top is an upward slanting line that gets farther away the longer it takes to get there.