ES Red Rising Megaphone is Still Intact
ES pierced the bottom of its rising megaphone (red) off the February 11 low by roughly 3 points yesterday. But the line break occurred in the context of ES forming a megaphone. The general rule is that breaks of important upward-slanting lines don’t count if they occur within the context of some kind of triangle or megaphone, as long as the triangle or megaphone breaks out upwards.
If the triangle or megaphone breaks out downwards, that’s when you switch to short. Otherwise, you simply redraw the line to include the triangle or megaphone.
ES has been hugging the red rising megaphone bottom since April 11, and usually that would be a sign that the move up is about to end. But in the present case the slow-down of the move has occurred in the context of both an approaching FOMC meeting and the normal resistance at an all-time high. That makes it at least a coin flip that the price is about to break out into a melt-up.