To help me answer this question one of the first things I like to turn to is a chart of the index or the stock.
My chart analysis occurs on two levels:
Level 1 - I look at the long term chart (eg daily, weekly).
Level 2 - I look at the short term chart (eg 30mins, 1 hour).
Based on the direction of the rally, I ask myself to decide where the next “checkpoint” will be.
My checkpoint is the level I believe an index or a stock could reach if the momentum continues.
This type of analysis helps me to assess if a rally will be short or long lived.