They Broke ES Out of its Purple Triangle Overnight – Critical Decision Point Now is 2080
They broke ES upwards out of its purple triangle overnight. Now it’s nearly back at its orange topping megaphone VWAP level of 2080, which is a critical decision point.
If ES wants to form the pink triangle here, it should either slice through 2080 quite easily or start a megaphone large enough across 2080 to get the price to the pink triangle top (purple scenario). A subsequent pullback to 2080 and upward breakout through the pink triangle top would target the top of the orange megaphone for the head of a head and shoulders top (red scenario).
ES could also form a fast top at 2080 and reverse there for a second leg down to 2000 in this correction (green scenario). Then it could rally again to put in a connecting wave before a bigger plunge.
Topping formations can always, at any point, morph into a different topping formation. The most important thing about this top is whether it pierces the top of the 3-year price channel while forming. If it does, this topping pattern is likely morphing into a continuation pattern for a big move up.
But that’s doubtful at this point.