ES has Now Broken Out of and Retested Two Trend Lines (Silver) and Appears to Be Breaking Out of the Third (Red)
From early March 2015 through August 20, ES put in a prolonged sideways move across 2080. The move was a series of megaphones inside megaphones that ultimately formed a shallow head and shoulders with a triangle right shoulder that broke out downwards into the crash into the August 24 low.
Now ES appears to be starting another prolonged sideways move across 2080. There’s an old-timer's rule that says once a price has broken and retested two trend lines (silver in chart above), the break of the next trend line means a sideways move has started. ES is stuck in a megaphone across 2080 that has clearly broken the third trend line (red in chart above).
A sideways move doesn’t mean that ES won’t reach a new all-time high. It just means that before ES puts in a genuine breakout from this area, we’ll likely see something like a triangle or H&S or big megaphone or rising wedge form and complete. Whatever type of formation completes, it can break out in either direction.
ES is Forming a Series of Megaphones Inside Megaphones on its Short-Term Charts
ES has already started forming a series of megaphones inside megaphones across 2080, and these are occurring within larger megaphones (orange, purple, and pink on the chart). Typically a series of megaphones inside megaphones will form a triangle. We could also see a triangle form within a H&S or larger triangle or bigger megaphone.
The main thing to remember is that most breakouts right now will be fake-outs, until we get a clear set-up in one direction or the other. I just got flat. This consolidation could last a week or it could last through the end of the year and beyond.