With seven weeks of losses for the Dow Jones, traders are left wondering when we are likely to see a rally.

As mentioned previously, the break of a monthly low indicated weakness and this is likely to continue unless we see a serious turnaround. Right now the Dow has reached and is testing a Fibonacci support level of 11225. We have seen the index trying to rally of this base for four trading days and the more time we spend at this level the less likely we are to see a thrust higher.

We would need to see the index climb above 11400 in order to see a short term bullish scenario but a breach of 11120 would suggest that lower prices are in store. Also there is no suggestion from momentum indicators that any significant low is at hand and we should remember that indicators would be a much slower indicator than price itself.

July is typically a sideways month and at best a consolidation could be at hand but even investor sentiment is not bearish enough to validate buying power for the Bulls. Remember that the longer term and intermediate term trend is down and for all intent and purposes, any rallies will most likely be bear market rallies. Surprises will be to the downside.

11700 11606 are the broader downside targets which indicate that another -5% decline is required and could also trigger panic selling where the smart traders are likely to pick up the pieces at bargain prices. But bargains in the current market environment are not what we should be looking for. More so we should be focusing on risk versus rewards. My view is that there will be significant moves in the coming months and both the Bulls and the Bears will be wrestling with market creating an increase in volatility.

There is an old Chinese proverb that Fish see the hook but not the bait and men see the profit but not the peril. Lets try not to ignore this advice.