End Of Week Leaves Market Poised For New Major Sornette Bubble Set-Up
Trader Moe | Feb 22, 2015 12:25AM ET
ES Formed a Triangle (Pink) at End of Day
ES ended the week forming a triangle. If it breaks out downwards, that triangle would be the top of a head and shoulders top at the navy blue megaphone top. If it breaks out upwards, it’s likely going to form a bigger head.
It turns out that the Eurogroup agreement continues to suck for Greece, but it was great for a short squeeze.
ES would usually retrace to at least the navy megaphone VWAP here. Then it would be legal for a breakout upwards.
It could also go for the megaphone bottom to set up a breakout downwards.
An upward breakout from the navy blue megaphone would set up the green scenario on the chart below:
ES Long-Term Scenarios
Essentially the green scenario represents Grexit fears put aside for long enough for the market to put in a blow-off top with the help of ECB QE. That is now the scenario with the highest odds.
The green scenario would also be a classic Sornette bubble set-up launching into the melt-up phase, with the lumpy top occuring in summer of 2014 through October 15, 2014, the first bobble at the subsequent touch on the price channel top and subsequent dip, and ES heading into the second bobble now. A new high after the second bobble is the set-up to bet the bubble.
It’s also a classic price-channel set-up–a breakout into a melt-up channel.
The purple and orange scenarios would be launched by a downward breakout from the navy blue megaphone. If we’re going to see the purple scenario (a new high within the 3-year price channel after the dip to the channel bottom) we’ll see a megaphone bottom form at the price channel bottom. This megaphone will likely break the price out of the price channel a time or two before heading up to a new high.
Update: Here’s the classic Sornette bubble set-up (below), highlighted.
Get The News You Want
Classic Bubble Set-Up
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.