IWM Price Channel Top
Trader Moe | May 21, 2015 01:47AM ET
On Monday, iShares Russell 2000 (ARCA:IWM) was in the critical decision wave of a price channel (blue on chart above). This is where a channel either starts a top or breaks out into a melt-up channel.
IWM pushed through the top of the price channel, setting up the potential melt-up, but then retraced into the channel too far and made higher highs that stayed within the channel.
That means IWM is likely forming a top on the channeled move.
IWM has a head and shoulders on its chart with a neckline at the top of a major long-term rising megaphone (orange in chart below). The price channeled move is part of a potential right shoulder on that H&S.
Here’s a close-up:
IWM is also trying to confirm a new price channel (navy blue on chart above) on its daily chart. A top on the smaller price channeled move would likely cancel that price channel and confirm that a significant top is forming.
The target for a move down would be the bottom of the pink topping megaphone on the IWM daily chart.
If instead IWM makes it to a new high within the navy blue channel, it will be in the critical decision wave for that channel between putting a top on the channeled move and breaking out into a melt-up channel.
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