ES has Put a Megaphone 5th Wave Across the Top of its Orange Triangle
ES is forming a megaphone top on its Christmas week rally. It is now putting in a 5th wave melt-up within that megaphone, and it has crossed the orange triangle top as expected.
ES can now put in a smallish top on the top of the orange triangle before a breakout downwards from it (green scenario). Or it can redraw the orange triangle (gray lines) by taking out the December 17 high but not the triangle high and then putting in another wave up from the triangle bottom.
Either way, ES has a mandatory retrace to put in to the bottom of its red megaphone for a breakout roughly equal in size to the breakout through the formation top. That means the orange/gray triangle is a strong favorite to eventually break out downwards to put in a trip to roughly 1950 or even 1900 before a retrace to the red megaphone VWAP at roughly 2000.
There are other mandatory retrace targets at 1850 and likely the August 24 low which ES should get to after that.
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