Over the last several weeks, we've traced out a pattern that can be interpreted as or (in the shorter term) with almost equal probability. "Almost equal" because the short term case is being pushed to its limits, so the probabilities continue to support a slightly more likely immediately case - a direct route up from where we are now.
On the chart above, I present the more case. Although the spike up today can can be seen as a classic triangle breakout, it also has the makings of a lower degree wave 3. As I write this, we are approaching the same key multiple I pointed out a few weeks ago - where we failed to overcome resistance on the first attempt. How things play out immediately from here will be revealing.
To sway the probabilities further toward the immediately case, we first need to see a break above 603. If we can break 603, the next resistance test will be in the 637 area. A convincing break of 637-640, in a clear impulsive structure will seriously damage the immediately case - until then, it's still on the table as a possibility. I'll post the alternative count in the comments below.
If we fail to break 603 on this next attempt, however, the weight of the probabilities will shift in favor of the bears.
So, we continue to track the patterns...and we wait until the probabilities are strongly in our favor to add to or take on a new long term position. The market will eventually tip its hand. They always do eventually.
Also, we already have enough waves in place to call wave (v) complete, so we might not make it as high as the upper blue area before correcting...and the structure of this topping region and the subsequent correction will provide additional clarity about whether we're more likely to have one more drop before running (much) higher, or if we're going to take a more direct route up...
1. The first is that we completed all of purple wave 4 with the high on 8/10, and are now on our way down to complete the purple wave 5 (of C of 4), with initial support in the 430 area.
2. The second possibility is that we completed wave A of 4 on 8/10, wave B of 4 with the low on 8/19, and are now on our way to complete wave C of 4 in the 630-640 area.
These valid potentials combined with the valid bullish potential don't paint a clear enough picture to assert a definitive next move, however, it should be clear how important 603 and the area of 630-640 are - much beyond the 640 area would invalidate both bearish possibilities. Until then, they must be considered.
Given current pattern structure, I would tend to favor as the most probable path: a breach of 603, and then a failure around 630-640. That would leave us asking the question of whether we're dropping in a wave 5, or simply correcting in a wave 4. This will be a much easier question to answer than the one we are currently faced with. So we wait, and we stay vigilant.