The eminis are up 5 pts overnight, but so far have produced only a completed Bat Pattern rather than a new high.

The dollar is possibly breaking out of its falling wedge — though it’s too early to say for sure.

The EURUSD has formed an interesting looking rising wedge and is coming up on a Gartley at the white .786 (not to mention a channel intersection.)

And, USDJPY continues to stave off multiple H&S Patterns…

…with the bounce on its latest neckline Monday setting up a fractal of the Jul 5-18 Gartley Pattern.

H&S Patterns aren’t always that reliable in currency trading, but it’s interesting that the target of the latest pattern (in the right shoulder of a much larger pattern) is the yellow channel midline back around 96 — which would spell the end of the rising white channel and complete the much larger pattern that targets the white 1.618 at 85.66.

Indications are that SPX should reach its own .886 (1697.91) on the open.  But, no signs of follow through just yet.

I’ll hold short unless we get a push through 1700.

UPDATE:  9:32 AM

SPX just tagged its own .886, so should be done here at 1698.38.

Bears now need a drop below 1691 to officially break the rising pink channel (and purple midline.)

continued for members…

UPDATE: 10:28 AM

SPX dropped through the 1691, reaching 1687.56 a moment ago.  We should see a bounce here as bulls try to defend the former 1687.18 high.  Probably worth a shot for traders, though I see additional downside ahead.

I’ll try an interim long here at 1687.59.

We should get a backtest of the broken purple midline to 1692 or the broken red midline to 1690.69.

UPDATE:  10:47 AM

There’s the red midline backtest.  I’ll close the long position here at 1690.69 and revert to full short — stops at 1692ish.

I’m anxious to see whether we can push much higher than 1690.69.  It’s the .618 of the hypothetical harmonic pattern I wrote about yesterday that features 1698.78 as its high and  1677.61 as its low.

1677.61 is the .786 of the rise from 1671.84 to 1698.78.  But, more importantly, the 1.618 extension of a drop from 1698.78 to 1677.61 would be 1711.86 — which is also the 1.618 of the drop from 1654 to 1560 between Jun 18 and Jun 24.

A drop to 1677 would also represent a tag of the red channel .236 line.  While not fleshing it out completely, it would establish the red channel as the dominant one for any potential upside.  [The steeper purple channel officially broke down, so I’ll go ahead and remove it from future charts.]

A better basing pattern for an assault on SPX 1823 would be a drop to the bottom of the red channel — currently around 1660.  A crab pattern based on 1698-1660 would put a 1.618 at 1721 — the 1.272 of 1687-1560.  But, there’s no basis for a Butterfly Pattern based on that particular drop.  It’s got Crab Pattern written all over it, and the 1.618 is at 1765.57.

To get to 1765.57 on a Crab Pattern starting at 1698, we’d need a 2.618 extension from 1657ish.  A dip to 1657 would leave the Jun 18 1654 high intact for wave purposes, and would constitute a dip to about the .786 of 1687-1560 — a common enough retracement in a Crab Pattern that responds at the double top.

This is all pure speculation, of course.  SPX is only off 10 points from its high.  We’ll revisit all these possibilities if/when it backtests the red/purple midlines and falls through 1684.  But, for forecast purposes, 1677 and 1654 look like good interim targets.

UPDATE:  12:59 PM

SPX is approaching the .500 of 1671 to 1698.  We could get a good bounce here, but the better place would be the .618 of 1671-1698 at 1682 — the intersection of a purple channel line and the .236 of the presumptive pattern.

Regular readers know to run the other direction when I talk Elliott Wave theory, but regardless of whether 1698 to 1691 was a “1” or an “A”, it would appear that today’s drop from 1698.38 to 1687.56 is only the opening salvo in the next wave down — which should mean plenty more downside.

UPDATE:  2:30 PM

The little H&S pattern targets around 1675 — closer to the .886 than the .786.  And, the bottom of the red channel is a better fit with the .886 as well.  So, I’m going to adjust the first downside target to 1674.91 instead of 1677.61.

If, as I expect, the current bounce is about done at 1686.43, look for a drop to 1677 later today to complete the current subwave, then a drop to 1674.91 to flesh out the channel either tomorrow or Friday.

UPDATE:  3:54 PM

SPX is tracing out a little pennant, visible here on the 5-min chart.  These are typically continuation patterns.  But, since it came at the .618, I’ll assume it could go higher — perhaps to backtest the neckline of the little H&S Pattern at 1688-1689 tomorrow morning.

But, I don’t see anything higher than that on the horizon just yet.  I’ll stay short overnight — again, not recommended unless you have the ability to hedge or cover in the event the futures market rebounds at or after the close.