iShares Nasdaq Biotechnology (NASDAQ:IBB) started a rising megaphone top (gray on chart) back in 2013. Then it formed an interior rising megaphone top (pink) and for a topping pattern on that, has put in a rising megaphone top (blue on chart).
Now the blue rising megaphone has started forming a top.
The key to how the IBB top on the blue rising megaphone will go is whether IBB breaks the pink formation’s top decisively before a new high.
A new high first would mean another rising megaphone, probably to the top of the gray rising megaphone. That would be about as far as a bubble can go.
A decisive break of the pink rising megaphone top would mean a more conventional sideways move to the gray megaphone bottom is in progress before a breakout downward from that with a minimum target of roughly 162.
Odds are high that we get the green scenario, but it’s not a lock. Within the green scenario, if it happens, we should see a higher high than the existing high, and that should be The Top.
If you see a new high before a retest of the pink formation top, you should buy at the pink formation top for a run through the gray formation top.