The hourly pattern carved out by the ProShares UltraShort SPY (SDS) since the beginning of June shows that all the action appears to be developing into a sideways contractionary price range.

At this point, a decline that breaks 51.80/50 should trigger downside acceleration to new low territory, while a climb above 55.05/40 should trigger upside continuation towards 57.50-58.00 thereafter. For the time being, after holding 51.79, the SDS likely is only mid-way through with its upward traverse of the recent range, as it heads for a test of 55.00 next.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.