Just to provide a little bit more context I think it is good to look at the Russell 2000 support and resistance levels because they are so important for future possible trend direction.
When looking at the chart below of the Russell 2000 I try to be as open minded as possible. I realize that there is large group that is looking for a head and shoulders break down. There is another group that is looking for an Elliott wave break down out of this pattern. There are probably some bulls too that are looking for a second leg of bull market run that started in March 2009.
The bottom line is that we will not have true clarity on the next new major trend direction until we either break below support on the Russell 2000 or break above the down trend line (the white one).
It is also unlikely that this definitive market direction decision will be made until the first or second week of September on the theory that the big money crowd does not arrive back in town until that time frame.
In my previous post I talked about how it looks like we could move topside again. Even if we do, it does not prove that much until a break above the white down trend line occurs, or we fall back down and break through support (590 on the Russell 2000 ).
The big money is going to be made on the clear identification of the new trend out of this large pattern (the pattern is the descending triangle or the larger head and shoulders topping pattern). It is worth mentioning that both a head and shoulders top and a descending triangle pattern can fail. Their reliability is a statistical percentage. Believe me when I tell you that I have seen these patterns fail before right at the last minute. The failure or success of the patterns is just a matter of time and patience. . .