(click image to enlarge chart)
The expected pullback mentioned in the last post has bounced at the exact bottom of the purple trend channel at 1127.75 (see purple arrow on chart above). That bounce also lines up nicely with the previous breakout high at 1128.50.
If the bulls are going to mount a renewed charge after a brief dip, this is a spot where it could happen.
This channel bottom is related to the January 1, 2010 triangle breakout back-test buy–since the bottom rail of the purple channel is constructed using the same bottom trend line from that triangle. That triangle has been important in defining recent VST action.
The rising purple trend channel bottom rail now serves as the VST stop/reversal line (price action is bullish above/bearish below).
The current Stops and Targets short-term primary trend line is at 1121.25 and lines up nicely with the black dashed short-term support trend line on the chart above (see black arrow).
Bulls remain in control in all time frames above those two trend lines…but if those trend lines are broken to the downside, then bears might have something going.