Looking at the hourly chart on the ProShares UltraShort SPY (SDS), the only thing we really know about the pattern is that the price structure has carved out what could be a double bottom low in December, which is juxtaposed against a series of declining rally peaks. The declining peaks line goes all the way back to the mid-August highs and cuts across the price axis at 38.30.

The near-term resistance line resides at 36.70, while the prior rally peak at 37.12 must be hurdled to trigger very significant buy signals. For the time being, let’s see if the current SDS recovery rally can challenge the December resistance line at 36.70.

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