JNK Must Retrace to Red Rising Megaphone Bottom at Blue Megaphone VWAP – Could Go for Megaphone Bottom
SPDR High Yield Bond (NYSE:JNK), like oil, will eventually put in a lower low. They could be about to head down to that lower low right now, or they could head back to the middle of the recent range and start megaphoning there to form a triangle first.
JNK must retrace to the bottom of its red rising megaphone at the blue megaphone VWAP. If it starts a large megaphone there (purple scenario) a triangle is likely forming. The triangle would be confirmed once the megaphone starts a new interior megaphone across VWAP.
The green scenario represents a fast move to the blue megaphone bottom. That would take JNK through the bottom of a multi-year megaphone, which would likely mean a major long-term bottom is forming.
Oil could also put in the green scenario before returning to the blue megaphone VWAP to start a series of megaphones inside megaphones there.