It’s the third day in a row of backtesting a bearish Head & Shoulders Pattern. Futures are up moderately, but haven’t broken out despite the algo factors’ best efforts.

Remember, only a lasting breakout busts the pattern. Backtesting only postpones the inevitable.

continued for members…

This is a backtest of not only the white neckline, but the falling white channel midline and a TL off Friday’s highs.SPX has about 20 points of wiggle room before backtesting its white neckline. Keep an eye on VIX’s SMA10, which has rolled over again and is now within striking distance of the SMA20. For ES/SPX to reach our downside targets, we’re going to need higher highs in VIX. Yesterday’s restraint was disappointing to the bears.Though VIX is a potential concern, CL is the factor driving this morning’s rally. It’s pushing beyond its former highs… …and, unless it reverses very soon, will have broken out above this long-term channel top. RB also pushed up to marginal new highs.  By the end of the day, its SMA200 will be higher than RB’s Aug 20 lows. In other words, it can backtest the SMA200 without making new lows – our expected scenario.USDJPY is doing its part this morning, bouncing on its SMA10……while EURUSD is slumping, suggesting the lower target might play out. If DXY holds here, it greatly improves the bears’ odds.