SPX Expanded Flat, Crude Triangle breaks

Despite the oversold indicators and overtly bearish sentiment  no sign of a turn on the SPX. The trend remains down. Every rally attempt last week has been quickly extinguished.

Retaking 1294 would give me some confidence that a trend-reversal is in place.  Until then the trend is down. For now the most probable (bullish) EW pattern is an Expanded Flat.

For now the next support level to watch is 1249. Trading below 1228 means that the (b) wave marked in the chart was probably (3) and we are in wave (4).

CRUDE OIL

Meanwhile, CL seems to have entered its thrust out of the triangle as forecast here. The triangle evolved to be a little wider that earlier thought ... as triangles tend to do. It is currently sitting on its H&S neckline. A clear break below should send it towards $83. A reversal should send a lot of H&S watchers rushing to cover shorts.

Possible Falling Wedge for Dollar Index

Crude poised to break from triangle

CL

After breaking down from the ending diagonal pattern with a sharp $20 move as wave A, Crude Oil appears to have formed triangle wave B.

Triangles are continuation patterns so CL seems ready to break down in a sharp C wave thrust out of the triangle. The projected move is shown in red.

The initial thrust is expected equal to the width of the triangle so this would take the price down to the H&S neckline. From here wave C is expected to continue to the $82-$84 area, which is the H&S target, where wave C = wave A.

An alternate count is shown in blue. The triangle could be a 'b' sub-wave of a larger B wave. In this case it would break upwards to around $107 which would be a 61.8% retracement of wave A. It would then break down to around $87 (H&S target, C = A) or carry further to 1.618 x A.

So wait for a clear breakout from the triangle to see which pattern is playing out before taking the trade.