Of course, this isn't really a valid , since prices have never reached the 1.0 level in the first place to create that necessary (P1), so this is only a hypothetical in a possible future retrospect (if that makes sense?).
The "real pitchfork" ( RP ) has the solid red line as the 1.0 (P1) level and the bottom solid black line as it's 0 (P2) level, with prices reaching as high as the 1.25 level (as the increments would now be twice that of the two-times larger - 0.25 increments for RP , instead of the 0.125 that the hypothetical uses).
In any case, it's to be expected that prices would come back to test the solid red line after breaking through it and the odds favored that it would happen at the 1.25 level to the RP .
We have a definite (topping) pattern, similar to what is seen at the other major levels in the past (shown by the squiggly red lines drawn on the chart). The behavior of this potential top is much different than both the 2000 and 2007 stops, both in that its tops are playing at the potential area much longer (with more tests) and in that the corrections to those top tests have made a much wider (volatile), but far less sloping, .
What does this all mean?
The way I see it, there are two likely scenarios playing out (of course, the actual number of possibilities are endless):
1.) We aren't seeing the top to a major bear market in the making. The slope to the during this correction, and the possibility that price has been reacting with what could become a type of in retrospect to a future (after the next possible future bull-run completes), both allow for this possibility. In other words, price may be gearing up for another major price move upwards. We would expect that a major to a would hold up to a lot of tests (act as strong support) and we should expect many tests after price traded so long below it before finally breaking it. The next logical step (after the holds up to repeated tests) is for price to go back to testing higher levels, with a fairly high probability of the 1.0 level being tested after the strength of the was made abundantly clear.
2.) We're simply seeing a different type of start to a major bear market, this time happening with a wider, but less sloping start to the decline, and at the 1.25 level (drawn off of the created by the 1990's bull market and two proceeding major bear market corrections). The question is of what importance this very different topping behavior and size (and slope) of the initial correction this will play on how the bear market plays out (will it break out of the channel with a fast and steep drop like in 2007, only more steeply and further down due to more in the initial correction to the topping pattern?). We could see a test of the bottom of RF out of a very steep and quick drop from the current . We could also see a test of the to RF , wherein price trades mostly inside of the current . Of the two options presented here, I'd go with the former as the more probable (quick, deep decline out of the current ), because it's been so long since the last major correction (bear market) and the topping pattern has taken so long to form (giving signs of storing a lot of "energy" for the move ahead).
Of course, price doesn't always trend. It's said that price trends only happen between one fourth and one third of the time and that the market usually trades within range. So there is the real possibility that price will hover around the current major highs and minor lows for many months, or even years, to come.
All we can do is look to probabilities based on past pattern recognition and tools known to put the market into better perspective to get an idea as to what scenarios are most likely to play out.