The markets are ready for a breakout or breakdown — best illustrated by the pennant we’ve been watching in USDJPY.

The dollar index:

The e-mini completed a reasonably well-formed Butterfly Pattern to the purple 1.272.   But, as we discussed last week, the yellow/purple 1.618 intersection at 1767 is very much still on the table.

If the small purple pattern breaks down, the red channel should get some fleshing out.  The key will obviously be the ability of the red midline to hold.

SPX completed the white Crab Pattern Friday, but could still have its sights set on the purple 1.618 (1764.50) from May.

UPDATE:  2:30 PM

SPX just reached the purple 1.618.  Great level to try a short position — with stops, as always.

The only caveat is that ES only reached 1762.25 — above the white 1.618, but a few points shy of the yellow 1.618 (1767.63.)  So, there’s a possibility that it will slide a little higher overnight.

If SPX were so inclined, it could tag along either intra-day or on tomorrow’s opening to 1770.97.  But, I wouldn’t consider a long position to capture those last 6 points unless I had the means to hedge overnight.

GLTA.