We know that when price breaks through Fibonacci price resistance while simultaneously rallying through resistance time cycles on the chart, there’s a high probability of an acceleration to upside until the charts show extended/overbought highs. This is indeed what happened on the daily index charts. Now it’s time to examine what’s “in the way” of further gains. A strong example is present on the longer term Russell 2000 index. Here’s the daily cash chart:

Click on image to enlarge!

Price is currently challenging the .786 resistance retracement drawn from the April high to the July low; 712. If that breaks, the implied target is the 1.272 multiple of that same high to low swing; 789. Why is this key? Let’s switch to the weekly chart of the same security:

Click on image to enlarge!

If this does indeed reach the target at 789, along the way there will be a break of the key weekly .786 resistance at 746. That’s the equivalent retracement level from the 2007 high to the 2009 low. Breaking that retracement level would imply that we’ll see a target above the 2007 high; 996.

This sort of follow through doesn’t always occur. If it did we’d never see a double top. But it does indeed place the emphasis on the resistance currently being tested. We’ll need to consider current daily swing highs as potentially pivotal until we see a close above that 712 level.

So far throughout the rally we’ve seen time and price support hold on all of our intraday charts. Timing cycles on the TF (ICE eMini Russell 2000 futures) 45 minute chart point to a possible high for early in this morning’s session. If we do see a drop, we’ll monitor the key price support levels and the duration of prior corrective declines too (timing support). Here’s the current TF 45 minute chart with the strongest nearby support levels labeled:

Click on image to enlarge!

For more from Mark including his “Chart of the Day”, visit MJBraun.net.