We went long at 1669 yesterday afternoon when ES broke out of both the rising white channel (from the 1624.75 bottom) and the  falling white channel (from the 1705 high.)

This morning, it also broke out of the rising wedge (red, below) and is closing in on the .786 retracement of the drop from 1705 to 1624.75.

This move greatly increases the odds of the bullish scenario we discussed yesterday playing out:

A strong reversal there (the white .618 at 1674.34) would set up a Gartley to the .786, but at this point the better candidate is a Bat Pattern up at the .886 (ES 1695.85, SPX 1700.)

ES shot right through the .618, so the Bat Pattern to 1695.85 jumps to front and center.  Note that the purple 1.618 at 1693.92, lending credence to that price target.

As always, a garden variety .786 Wave 2 is still on the table.  So, be cautious around 1687-1688.  A reversal at 1687.31 would set up juicy downside scenario, so bears could dig their heels in at that point.

UPDATE:  8:30 AM

Here’s the chart cleaned up a little.  I’ve sketched in a rising red channel that’s parallel to the two prior acceleration channels (1530-1685 and 1553-1695) just for grins.

Those prior channels were insanely steep — producing 155-pt and 142-pt gains in about a month each.  It’s nice to have a frame of reference.

Are bulls completely out of the woods?  Hardly.  That state of bliss is reserved for new highs and budget compromises.

In fact, the last time ES pulled a rally out of a bear’s mouth (from 1596-1649 on Jun 6 and again on Jun 13 — the rally so nice, they did it twice) the market plunged 96 points in 4 days.

Stay tuned.

UPDATE:  9:20 AM

Inside day for DX so far, still working on backtesting the falling purple channel top and falling white channel midline.

And, USDJPY — while clearly breaking out of its falling white channel — is still having a tough time breaking back above the purple midline or back into the rising white channel.  The fact that it’s still backtesting both suggests that reaching the .786 (tagged today) or the .886 will prompt a decent downturn.

Speculating here, but USDJPY .886 tag at 100.87 coincident with ES .886 tag of 1695.85?

The EURUSD, meanwhile, is still trying to join the party.

UPDATE:  9:45 AM

Assuming ES/SPX retrace .886 of their losses from 1705/1709…then, what?

continued for members…Remember the TL from 1994/2002 we’ve had on our charts for many months? [connect 442.88 on 12/10/94 and 776.76 on 10/10/02.] It’s right up there at the .886s, along with the purple 1.618s.

Here’s the view on SPX:

A close up, showing quite clearly that the purple channel midline runs through that price level, too — probably either later today or early tomorrow.

Whether the .886 (assuming we reach it) will serve as a Point B in a big, fat Crab up to SPX 1760 or the end of the line — it’s too early to tell.  But, the reaction should at least be meaningful.

UPDATE:  11:42 AM

Keeping an eye on the light blue channel — will short if it’s broken.  Just nudged through the red midline…

UPDATE:  3:46 PM

This market’s like watching stew cook.  A very slow, very sedate simmer.  Will hold long in the aftermarket for the afore-mentioned targets, stops at the red channel midline — currently about ES 1679.00.  I would expect a backtest of the .618 (1674.34) at some point, perhaps overnight.

GLTA.