With a gap and big surge, the Dow Diamonds (DIA) triggered a series of bullish signals that remain valid until proven otherwise. First, let's look at the bullish signals. DIA bounced off support in the 174-175 area in early July and broke resistance with a surge above 178. Also notice that an island reversal formed as DIA gapped below 178.2 on 29-Jun and then gapped above this level on 13-Jul. The resulting gaps created an island where bears (short-sellers) are trapped with losses. Momentum also turned bullish as MACD moved above its signal line and turned positive.
So what would it take to prove these bullish signals otherwise? First and foremost, the gap and breakout are bullish as long as they hold. A close below 177 would fill this gap and negate the breakout. Such a failure would call for a reassessment. Second, momentum has a clear upward bias as long as MACD remains positive. A MACD cross into negative territory would be bearish. Note that I am not worried about low volume because volume is supposed to be low in summer. Price action is first and foremost, and the gap is bullish until proven otherwise.