While the daily chart of the US SPX500 continues to trade within a wide and volatile range of a distribution market cycle, there are some early signs that the daily has once again found the bottom of the range and is ready to rally higher. This potential reversal can be taken by watching for a floor, however, a more prudent confirmation would be to wait for momentum higher.

The intraday, 240-minute time frame is indicating that the bullish momentum off the 1069.5 Monday session low could be attracting enough buyers to carry the US SPX500 through the downtrend line resistance of the Channel Down formation. The entry trigger is currently 1080 (A). Should the bulls find the momentum necessary to trade through the downtrend line and reverse the 240-minute downtrend, an Autochartist Reversal of the Trend (ART) will be confirmed. As the Initial Trend reading is just one bar at present, it would be good to wait for momentum since there is sufficient confirmation that the trend on the 240-minute time frame has transitioned into a sideways market cycle. The downtrend line resistance of the Channel Down is the decision level for the entry long. A six bar or greater Breakout reading would offer strong support for follow-through higher.

While Channel Down pattern alerts would generally be considered "Continuation" patterns as seen by the Trend Change there is no confirmation that the downtrend is still the dominant market direction. This pattern is ideally suited to capitalize on a surge of upward, corrective momentum. However, do not ignore the fact that exhaustion at the 1080 level could reinvigorate the bears and allow for a move lower towards pattern support at 1050.