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If ES Can’t Pull Back from Here, the Red Triangle Set-Up is Canceled, and So Is Its Edge
ES has put in a small pierce of its red flat-topped triangle top. But it hasn’t put in the pullback it needed first to complete the triangle.
Without the pullback, there is no edge in betting the breakout.
Triangle breakouts tend to pay off with good-sized moves because of their coiling structure–someone is betting wrong, and on the breakout you run over them.
Without a proper pullback here, there aren’t enough people to run over to give a breakout from the formation its usual payoff.
So ES either pulls back to the bottom of its potential blue topping megaphone before a breakout (green scenario), or it keeps creeping up to the likely FOMC/triple witching high on Thursday and simply rolls over.
Without a proper flat-topped triangle, the only strong potential bullish set-up is a breakout from the orange price channel, and that is unlikely too because of the price action off its last touch on the bottom.
The strongest trading set-up on the chart remains the NYMO close below -100 on August 24. A NYMO close below -100 is almost always followed by a lower low.