The SPX500, better known as the S&P 500 index, is trending strongly higher on the 240-minute time frame despite the pullback during the past three sessions, which has transitioned the shorter-term 15- and 30-minute charts into fresh downtrends. On the 240-minute chart, the near-term downtrends have pushed price action to the support of the Channel Up pattern's lower line. This downside correction can trigger one of two entries, depending on the strength of the underlying trend.

Daily Index Update

With an Autochartist Initial Trend reading of six bars or more, it's more likely after a correction that prices will continue to travel in the direction of the trend; in the case of the 240-minute chart, this means the move lower to Channel Up support. A weak Initial Trend reading suggests there is either sideways volatility or a narrow range-in those environments, a stall or reversal should be expected.

Since the Initial Trend reading accompanying this Channel Up breakdown is the maximum of ten bars, the break is testing support but should be sold into with caution due to the likelihood that traders will buy into the pullback between uptrend line support at 1098 (E) and the Forecast support between 1083 and 1067 (F). The ten-bar Breakout reading points to a high degree of bearishness on the pattern break; therefore, a deeper correction is likely.