The Guggenheim Shipping ETF ($SEA) has formed a bullish, 8-week consolidation above the rising 10-week MA. We also see the base forming above the "dirty" uptrend lime (dotted red line on the chart below):



We call it a dirty uptrend line because there are a few lows on the weekly candles that dip below our trendline. Drawing a trendline for us is more about finding a line that makes sense on the chart, rather than some rule in a trading book.

The only solid rule we have with a trendline is that it must have three touches to be considered valid. Until then, it is simply just a line that may or may not provide support.

Volume declined considerably during the base, which is a bullish sign. On the breakout around $18, $SEA started to attract some heavy buying interest, but once the rally stalls, the momentum traders usually want out.

As the ETF consolidates in a range and more traders head for the exit, we then see the dry up in volume that usually precedes a bullish breakout.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.