This chart of IWM is from December, 2010. When IWM is strong, the RSI on the 60min chart will rise above 70 and stay above 70 for several days and IWM will rally on. On the other hand, when IWM is weak then when the RSI on the 60min chart rises above 70 selling ensues.
Note on the chart below that the RSI rose above 70 early in the first week of December and then stayed above 70 for the next 5-6 sessions. Even when IWM did come in a bit, it managed to stay within the rising price channel and above the 50EMA.
At some point in the future, IWM will be able to rally on even when the RSI on the 60min chart hit the overbought levels at 70 and above. Unfortunately, I don’t think this is that future so in the case that IWM should pull back from here, then it’s going to be just how it pulls back that determines what lies ahead for this key sector. IMHO, of course.
Chart courtesy of StockCharts.com
That’s a good chart for your archives.