SPY Completes Expanding Pattern

With about 90 candles on the SPY cash 30-minute chart, we called this afternoon for the end of the SPY's expanding pattern - which may be an expanding diagonal; which may be a leading expanding diagonal or which may be an ending expanding diagonal. As best we can tell, the pattern is of the 3-3-3-3-3 form as shown below.

SPY Cash - 30 min - Expanding Diagonal Completed

The pattern fits the form in every respect with wave ((5)) > ((3)) > ((1)) in both price and time, and wave ((4)) similarly greater than wave ((2)). Further, wave ((4)) overlaps wave ((1)) without going beyond the end of wave ((2)), and all the sequences can be counted as zigzags.

After the pattern completed (with a 'c' wave that made a contracting ending diagonal), then prices broke the 'c' wave contracting diagonal's upper trend line and made a 23.6% retrace, so far.

While the diagonal is likely completed, downward movement does not have to be. On the ES daily chart, price is below the 18-day SMA, so the bias is lower, and the swing-line indicator has the trend down with lower highs and lower lows. But, price is not down to the lower daily Bollinger Band, yet, although the daily slow stochastic is in over-sold territory.

The Fibonacci retrace ruler has been placed on the chart above. The larger wave pattern down to the low is really messy at this point. It CAN be 'any' of these three wave labels given the Principle of Equivalence a / i or c. The c wave label applies if the wave is an 'ending' diagonal rather than a 'leading' one. What matters most next are 1) if closes stay below the 18-day SMA, 2) if a retrace stays below the high, or 3) if today's cash or futures low is exceeded lower.

Until we know more, the current wave labels provide little guidance. As stated in the comments, when the market wants to, I have seen these pattern break lower much more quickly than expected, say, if the Smart Money wants to get price down to that daily lower Bollinger Band.

Have an excellent start to the evening.

TraderJoe