Click on the above image for a larger image
Let's take the last few year's price action apart in order to place the current rally in perspective.
1.) The market has been in a confirmed downtrend since the beginning of 2008. Since that time it has rallied 4 times -- March - mid-May, early July to the end of August, November to January 2009 and the current rally which started in March of this year. All the rallies formed upward sloping triangles, sometimes referred to as wedges.
2.) The first rally ran into upside resistance at the 200 day SMA while the others ran into resistance at or just beyond the 50 day SMA. Currently, prices are at or near similar areas around the 50 day SMA
3.) The rallies have varied in strength from (roughly) 8.3% t0 25%. The current rally is over 20%, but is still below the bigger gain of the November-January rally
Notice the following on the 6 month chart:
-- Prices have moved though the downward sloping trend line that connected several points
-- Prices have moved through several previous lows
-- The 10 day SMA has moved through the 50 day SMA
-- The 20 day SMA has now turned positive
-- In other words, there are now several important technical areas of support for prices should they fall
Above is a chart that shows more of the support areas in the event of a pullback.
