Potential Sornette Melt-Up Set-Up (Green Scenario)
There’s now a potential Sornette melt-up set-up on the ES chart.
A Sornette melt-up set-up is essentially a megaphone that breaks out upwards without a retrace to VWAP. Instead of the retrace to VWAP, the price usually puts in a double bobble as it’s breaking out past the previous megaphone high.
The target would be a breakout through the top of the red megaphone to put in a topping formation at or across the top.
ES could then put in a Sornette Part 3 melt-up by retracing to the Sornette melt-up set-up area and reversing before taking out its low. Part 3 of a Sornette melt-up is always the biggest, fastest part, but you often don’t get a Part 3.
The Sornette melt-up set-up could fail by failing to return to Monday’s high, putting in a H&S at 1883 instead.
It could also fail in the second bobble.