SPDR Barclays High Yield Bond (ARCA:JNK) has officially broken out of a triangle (navy blue on chart) across VWAP of a megaphone (red on chart) that goes back to 2010.
The breakout target is the red megaphone bottom.
But JNK formed a price channel (pink on chart) on its way down out of its triangle. It’s now about to hit the critical decision point at the bottom of that price channel.
If JNK pierces that channel bottom and puts in a partial retrace, it’s going to break out downwards into a series of steeper melt-down price channels to its target. It could even break out of the red megaphone and go all the way to the 2009 low.
Or it can break its fall right here by turning this wave to the bottom of the channel into the first wave of a sideways move that will lead to an upward breakout from the pink price channel (purple scenario on chart). This sideways move would most likely form a megaphone, and it would morph the navy blue triangle into a larger megaphone.
Note that oil did nothing today to give JNK any hope.