We've seen index prices reach daily upside targets with only very minor pullbacks and new swing highs almost immediately afterwards. This "overbalance" of the Fibonacci patterns has led to an upside acceleration. The best tactic for finding additional resistance is to step up to the next higher timeframe; the weekly chart.

While we’re facing considerable resistance on this timeframe on all of the major indices, this Dow weekly chart stands out:

Click on image to enlarge!

Price is currently testing the 1.618 target extension of the prior high to low swing as shown with the red trendlines. This is the second target we look for in any given swing as long as there’s no strong pullback from the 1.272 price extension. As the second target, it’s a reminder that price is indeed very extended, or overbought, at this point. In addition, the bold blue .786 resistance is just above. This level will determine whether or not our focus needs to shift to targets above the 2007 high. It’s a major consideration and actually represents the strongest price resistance on the chart since the 2009 low. If we’re going to see this rally stall, this is the prime area to look for a reversal to the downside.

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