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Let’s take a look at the ‘Big Picture’ starting from monthly bars and working back to hourly…
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The lower high/lower low paradigm was officially broken in February of 2018 when the last lower high of the VLT bearish trending sequence at 1502.25 was topped. That led to a breakout run to challenge the previous all-time high at 1678.50 and that too fell in July. The next higher target became the top of the VLT trident channel–which as I mentioned many times, has been my ultimate target since the bottom spotter low at 566 confirmed.
We are ‘there’, and have been–now going into the second monthly bar. This is a point of resolution and where the very biggest of the big fish have come out to play. There must be resolution to the simple question of ‘is that it?’, and so we see this current sideways action as nervous investors look for a breakout from this potential topping/continuation buy zone.
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The weekly bar chart above shows the minor breakout above the parallel channel top that represents the LT trending setup. That parallel channel top roughly aligns with the VLT setup–so this area has the undivided attention of nearly all professional long-term and very-long-term players. If the pros decide to continue the push up and into uncharted territory, that light gray channel shows the next steeper trident channel. So, the question here is the same; ‘was that it for the LT for now–or is there more upside to come?’.
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Moving in to the daily bar and range chart gives perhaps the best current perspective…
The short-term range is quite extended and we will probably need to see the formation of a higher ST low to bring that range bottom higher. The recent VST pullback to 1736.50 achieved the minimum pullback for a potential ST structural low–so now we wait to see if that low can withstand the next pullback, which could be imminent if the red descending trident channel holds.
The first real danger for bulls would come on a break below 1736.50. If that low is defended long enough to become a new higher structural low, that would be the first point of a potential paradigm shift–but I may be getting ahead of myself, so let’s watch to see what happens next.
The two points of most concern on the chart above are the current VST range boundaries of 1774.50 and 1736.50. A breakout above the range could achieve escape velocity if it appears that the top of those large trident channels from the monthly and weekly charts will not contain the VLT/LT rally.
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…and lastly, we zoom into the hourly bar chart to see what is happening in the very short term.
As I pointed out recently, we got the stop/sweep reversal play at 1773.25 followed by a quick shot down to take out the stops underneath 1747. That double stop sweep served to enlarge the VST range as we all await resolution of the consolidation around the magenta VLT trident channel top rail. In a bearish setup, that descending red trident channel is often a great place for a counter-trend entry–but there are always big risks going against a powerful trend on the edge of a potential breakout!
So, the tension continues to build on the uncertainty–and that is what sets up great trades.
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As I also pointed out in my last posts, we got a great counter-trend setup from the touch of ST resistance on Stops and Targets that coincided with the VST setup from my hourly bar work. That yielded a nice little counter-trend swoop back down to the shaded green ‘ideal entry zone’ on the S&T short-term chart. Now, the primary trend is re-joined as we await the possible re-test of that simple resistance at 1773.25.
If we get the eventual formation of a higher short-term low at 1736.50 the range will narrow and that would become the new primary trend line.
As for S&T counter-trend entries; if the current rally fails–the first ST counter-trend sell setup would come on a break below minor support of 1726.75
So, now we watch and wait to see what comes next at this extremely important juncture of resistance across multiple time frames.
The trend is your friend until it ain’t, and for now all trends remain up > 1736.50, which may become a very important number in the upcoming days.
…my .02
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