Today’s Rounded Reversal is still the dominant pattern, but what’s more interesting is that price retraced up into a confluence Fibonacci area.  Let’s take a quick look at this and what might be in store.

Drawing two Fibonacci grids from the $98.11 low of August 17th to the $100.81 swing high on August 14th, and then back to the swing high near $101.60 from last week yields the following two Fibonacci price grids.

The 50% and the 38.2% Fibonacci retracement levels align almost exactly at the $99.47 level, which was just shy of today’s intraday high - this level will be absolutely critical to watch in tomorrow’s trading session.

A possible 5-wave Elliott fractal to the downside may be completing, with the 5th wave just around the corner, if not forming already.

To make matters worse for the bulls, a ’rounded reversal’ arc (which I pointed out in real-time today) has formed into this level.

SPY Rounded Arc Intraday:

Typically, a ’rounded arc’ is a gentle reversal pattern that highlights the transfer from demand to supply in an orderly fashion.

The Three-Push negative momentum divergence, along with the negative TICK divergence (shown in today’s earlier post) paint a rather bearish picture.

I describe these structures, patterns, and levels in much more detail in today’s Idealized Trades report (please visit our premium content section for subscription information).

There’s certainly no guarantee price will inflect downward off these levels, but the odds certainly favor a continuation downward move… or at least that reward remains to the downside while reward remains to the downside from a strictly technical (chart) perspective.

Be safe out there and please check back for more updates.

Corey Rosenbloom, CMT
Follow Corey on Twitter:  http://twitter.com/afraidtotrade