Pattern Reaching Its Maximum Complexity I Think

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The chart above is the cash S&P 500, SPX. By the way I track "waves" I would say it currently is in the 7th wave of a pattern up since July. I also view the first move up from March to June as a 7 wave pattern. That is typically the maximum amount of waves you will see in any corrective type pattern, particularly if it is trending in one direction. In addition, if the trendlines of the early part of the pattern expand, they will usually contract on the later part. The opposite is true as well.

A primary rule of logic I have learned to apply to these situations is derived simply from price itself, because all possible information, supply, demand, etc that can be known boils down to one thing- the going market price. The direction of the largest and highest velocity price moves, is the direction of the trend. Only when a counter trend move is larger and faster than the most recent move/wave, can you have a high probability that the trend has changed. There are other things that can be taken into account, but simplifying it to this will be helpful to most people.

On that note, the trend remains up in my mind until we see such a price move. However, the risk to reward is skewed toward the downside from my perspective, and has been for the last couple months on both a sentiment and a qualitative pattern recognition level.

For trading purposes right now, my primary time frame for trading has been progressively shifting toward the intermediate (or longer) term time frame rather than only short-term. I will be relying primarily on candlestick patterns in conjunction with short-term technical divergences to try to locate a good spot to take a new bearish trade on the stock indexes. I would expect this opportunity to come by next week, or even in the next couple days.

There are some notes on the chart above, but I am very suspect of any break to new highs on the S&P and expect it to fail pretty quickly if it happens. It would be ideal to see a nice big engulfing pattern or shooting star or something like that to get into a new trade.