IWM failed to break out of red price channel in its critical decision wave – that means it’s now working on the top of the top
iShares Russell 2000 (NYSE:IWM), like SPY (NYSE:SPY), has been chugging up a price channel all week. The price channel failed to break out upwards into a melt-up in its critical decision wave, but broke the channel top on that wave.
That means the critical decision wave likely put in the left shoulder of a head and shoulders top, and IWM is working on the head of the head and shoulders right now.
IWM’s target is its blue megaphone top
One helpful thing about IWM is that the target of this move up is crystal clear–the top of the big megaphone (blue) that IWM started forming in mid-January. After reaching the megaphone top, IWM must retrace to the megaphone VWAP at roughly 98, and if it puts a significant topping formation on top of the megaphone top it will be a favorite to head down all the way to the blue megaphone bottom.