In last week's article I discussed the possibility of a small pullback once the 1233.50 target had been met. Price rallied through this level and we've seen a high in the 1242 area resulting in a pullback over the last 2 sessions. Here's the 45 minute chart that we use in my chat room in order to determine intraday directionality:

Click on image to enlarge!

The pullback has all of the signs of a classic Gartley corrective move from a longer term swing high. After retreating from the high on Tuesday, price started to rally but got hung up at the .786 retracement resistance retracement of Tuesday’s high to low. The subsequent price failure put in yesterday’s low right between the target extension ratios, 1.272 – 1.618, with additional price support retracements in that zone. If price had broken the 1.618 target extension at 1228.50, the pattern wouldn’t have been as clearly defined. As it stands now, it gives us an excellent chance to project the potential for the rally to proceed from here. The key resistance zone, labeled at 1235.50 – 1235.75, represents the rhythm of a potential downtrend. If we’re actually seeing a new pattern of lower lows and lower highs forming, we’d expect to see this hold. A break above this zone would give us a reasonable assurance that this is on the way to a new daily swing high, with the initial target indicated to upside. I’d still keep an eye on the .786 resistance retracement in the 1239 area, but generally once the price projections break within a Gartley pattern, it follows through to the targets.

Reinforcing the idea of more daily upside, we still have the major target overlap at 1251 as shown on this daily chart:

Click on image to enlarge!

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