We are all aware of the strength MPI demonstrated starting the second half of July. However, last week, its uptrend accelerated and today, confirmed its short-term peak at 3.46. I'm open to the possibility that MPI can still resume its uptrend after a slight correction. Note its support levels around the 3.10 to 3.25 area, which also happens to be its 23.6% to 38.2% retracement levels. If MPI is as strong as I think it is, then it should no longer break below 3.10.
In the medium term, we can see that MPI is moving upwards within a very wide range. At current levels, MPI is definitely closer to the top than the bottom. In the chart below, I encircled prices near its resistance line with their corresponding volume. Notice that in the past, prices peaked when MPI had a relatively spectacular volume with its corresponding price close to the resistance line. Last week, MPI registered a volume of 84M and 108M when MPI has not reached a volume more than 65M starting May of 2010. Following trend alone, this says that MPI looks ready to head back down to its support line. But given the bullishness of our market, let's give it the benefit of the doubt. Be on the look out to buy back on the the formation of a bullish higher low. If MPI is able to deviate from its prior behavior, the break of its resistance line should be a very strong move. Also note that MPI has a big gap to fill starting 3.80 to 4.70.
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