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By Michael Paulenoff, MPTrader.com
Here is a look of the condensed DIA hourly chart, which shows the June-July bottom, followed by the 45-degree angled "railroad tracks" that comprised a very powerful uptrend between mid-August and late-November -- followed by nearly 3 weeks of sideways action that resembles a "mini" version of the June-July pattern.
Right now, my sense from the pattern and the underlying oscillators is that the 3-week pattern represents a bullish continuation period, that will resolve itself in a thrust to new highs that projects next into the 125-126 target zone. At this juncture, only a decline that breaks the 120.80/70 support plateau will wreck the pattern and morph the 3-week period into a very significant top to the July-Dec upleg.
Furthermore, a break of Friday's low at 122.32 will trigger a preliminary alert that a decline towards 120.80/70 is gaining traction. Barring such weakness, the bulls remain in directional control, looking to ignite a thrust to new highs -- perhaps in the aftermath of the FOMC meeting tomorrow afternoon.
Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!
