S&P 500 struggling to escape down channel but has a chance

S&P still clearly inside the regression down channel off the Sept 3 ATH. The good news is that it made a higher high today, but right now it looks like it is forming a bearish rising wedge pattern. That pattern also seems to align with closing the gap from Monday and the resistance line formed off the recent peaks. It is also the 1.236 fib level off Tuesday rally.

Tomorrow will tell us a lot. I am looking for a repeat of this morning with selling overnight with an early morning rally to try and break free of the wedge and ultimately the down channel.

If it is able to break through the gap and resistance line, then the next key resistance will be the black trend line representing the bottom of the rising wedge of the COVID rally. I would give this a 50/50 chance as a retest of the support turned resistance is a very common behavior.

If the black trend line holds as resistance, then I am guessing there is a good chance that a bigger correction down to the 4000 level to fill the gap from April is possible. That would be a 12% correction of the ATH, which is what most of the talking heads are saying.

If it can close tomorrow of Friday above the trend line, then it would seem the bull rally is back in full swing.