The Melt Up

The market continues to melt up, enjoying the lack of any meaningful overhead resistance — for now.  As discussed yesterday, that should change around SPX 1635-1643.  Until then, at least, I remain long.

Meantime, the dollar continues to bounce around the channel lines, refusing to commit one way or the other.  We’ve been watching for any breakout that would signal an equity sell-off.

In the past, thrusts towards the channel midlines has been trouble for equities: the dips to 1042, 1173, 1074, 1266 and 1343.)

The recent completion of the purple Bat Pattern at the midline of the rising red channel also thrust past the white midline — but, produced only a 46-pt (3%) correction in SPX.

So, we’re left to wonder whether something bigger is coming: perhaps a run to the white .786 (85.47) to complete a big Gartley Pattern and tag the purple midline.

Note that the purple 1.272 is at about the same level, but there’s no argument for a Butterfly Pattern on the purple grid, only a Crab Pattern up at the 1.618 extension (also the white .886) around 87.

I’ll be watching to see whether or not the small rising purple channel holds.  If it does, the potential white harmonic pattern won’t play out and DX will remain above the .25 red channel line.  If not, there’s potential to the bottom of the red channel at 79.93.

The daily SPX RSI channels offer a bullish scenario if SPX can push through resistance at 1635-1641.

The past two days saw it break the TL connecting the last three spikes higher, and today’s value has topped the previous peak — so, a potential break in negative divergence.

But, the daily chart can be deceiving on an intra-day basis. The current push above the yellow TL and red channel midline could be erased with a reversal later in the day.  If RSI is repelled at the red midline, the white midline or lower would be back in play.

Will SPX push through?

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