Nearing Counter Trend Pattern Completion?

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It is unclear to me at this time exactly what the best pattern structure forming here is, but I have drawn contracting trendlines forming a rising wedge type of triangle starting at the May 18th low which was the momentum trough of the recent decline.  The ideal projection for the end of this upward pattern would be mid to late this week with a high around 137.00 on SPY.  That would also coincide with the filling of a couple overhead gaps and a 61.8% retracement of the May decline and also with old support at around 136.  A basic tenant of technical analysis is that old support becomes resistance once broken.  So a move back to the March and April lows may be a resistance level and is right in the same zone.

On an objective basis the daily stochastics is back to nearly overbought and the hourly charts are showing overbought technicals with some signs of bearish divergence showing up.

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For those unfamiliar with the VIX:VXV ratio you can search my blog for "vix/vxv" and find prior mentions of it.  But it is a mean reverting sentiment indicator of sorts showing when near term and longer term volatility are out of balance.  Very low readings suggest that volatility may rise in the near term.  Very high readings suggest a market panic and that a rebound is imminent.  Currently, the VIX dropped a lot today, and sent the ratio to a moderate extreme suggest a market price high is upcoming.  I would use this as corroborating evidence that technical sell signals could be taken and put options could be purchased at a potentially favorable premium.  Of note is that the ratio did NOT rise above 1.00 on the recent decline.  That level is often the level showing that things are way out of balance on a downside move.  So, basically the decline did not show much fear (either in absolute VIX or in the VIX/VXV ratio), so it is less likely that the recent bottom will be of major significance.  In short, I expect it to fail to hold prices.

Breadth has rebounded significantly with the 10 day average of the advance-decline rebounding to counter trend high levels and the McClellan oscillator is also back at a high level near prior rebound peaks.  So it may be best to see a little bearish divergence develop on those before a short trade is ripe, but again it is a red flag for rally continuation.