SPDR S&P Metals & Mining ETF (XME) continued its upward trend last week after breaking out of a short bullish triangle. It’s now approaching an area of potential resistance at the top of its trend channel. 

So far momentum is still bullish although volume was below average on the weekly chart. Also, notice volume declining on the daily chart as the week progressed. 

XME closed at $65.59, near the high of the week. It also broke a little above its lower top channel line after a run of 8.7%. The close is now above the 1.27% Fibonacci extension ($64.94) of the downtrend begun from the April 10, 2010 high of $60.40. 

A move through Friday’s high of $65.69 will signal a potential move to the top channel line, which will be in the area of the 61.8% Fibonacci retracement of the larger downtrend begun from the early July 2008 high. The 61.8% level is at $65.93.

Watch for a pullback somewhere near these levels and subsequent entry at a lower price. (www.etf-portfolios.com)