ES will Likely Retest the Bottom of the Rising Megaphone (Red Line) Off the February 11 Low
ES formed a price channel on yesterday’s move down and started a megaphone in its critical decision wave. So it’s either forming a bottom (that will likely retest the bottom of the big rising megaphone off the February 11 low) before heading up to a new all-time high, or it’s about to break out of that megaphone in a consolidation that is an attempt to top that move.
Usually we’d see the new high, then enough of a pullback to hit some tight stops, then the real breakout (green scenario).
If we do get the breakout (purple scenario), a H&S here that actually breaks out downwards would mean a retrace to at least 1875 and probably 1810. A megaphone across the breakout point would usually mean a new high.
A Breakout to a New All-Time High would Set Up the Navy Blue 5-Year Rising Megaphone
We’d see a new all-time high on ES a lot lower than on SPY (NYSE:SPY), but a new ATH on ES would strongly suggest that we’ll see the new all-time high on SPY. A new all-time high sets up the navy blue 5-year rising megaphone on the chart above. It would also be an upwards breakout from a prolonged head and shoulders, which would usually lead to a melt-up.