We can think of a particular market like a body of water, and the buying and selling of that market as adding or subtracting "weight" from that body of water. So, much like Archimedes principle of displacement, price always goes back to areas of previous breakouts (I use "breakout" to be synonymous with a "breakdown"). If there are more buyers than sellers and price breaks out through a previous resistance area the eventual selling of those buyers will bring price back to the area where accumulation was taking place to fuel the breakout.
With that said, here is the IWM weekly (left) and daily (right) charts:
As more shorts entered the market around $80.50 and higher, the covering of those short positions (at a weekly support pivot) is causing the displacement of price to return back to a level where "weight" was added (the $80.50 area). After which time we'll see sideways accumulation or distribution. We'll know whether it was accumulation or distribution when price breaks out higher or lower from this sideways consolidation.
The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at firstname.lastname@example.org
I am always open to questions, comments, or suggestions on how to improve this blog.