This very much depends on what type of response style you prefer...
Some people advocate what are called paradox responses. Their goal is to preempt the opponents as much as possible by forcing the bidding to the "lawful" resting place as quickly as possible.
In this case, the logic would goes as follows:
1. Partner has a six card suit. Worst case scenario is that partner has a club suit in which case, we should be playing 3!C. So, I'm going to bid 3!C immediately. If partner has Diamonds, or Hearts, or Spades, I am happy to see him/her correct to their suit at the three level.
2. If I had passed instead, this would typically show some hand that is very worried about playing a doubled contract. I am either showing
- Some hand with a singleton or void (where I am worried this is partner's suit)
- Some very flat balanced hand with "nothing" where playing 3 foo doubled looks deadily
- A hand with sufficient defense that I expect to set a NT contract
- A hand that would have an obvious balance if the opponents settle at the two level
Other people play a more normal advancing style In this case, the logic goes:
1. Partner has a six card suit. Once upon a time, I was forced to respond 2!D to give partner the opportunity to show their suit as cheaply as possible. However, the opponents double means that I no longer need to do so. So, I now have the opportunity to pass with any hand that has no idea what they should do
2. Conversely, if I decide to show a suit I am, to some extent, over riding partner and suggesting that playing in my suit might be the best course of action.
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IMHO, either stye is reasonable to play, but make sure that you and parter are on the same page.
With this particular hand, we're red on white. Its very important to recognize that 2(foo)X-1 or 3(foo)X-2 rate to be VERY bad contracts which is also going to shape out decisions.
Conversely, the opponents might be reticent to make low level doubles since 2MX= is going to score amazing well for us.
With this in mind:
Playing a paradox style, I think that my hand is barely good enough to bid 3!C, however, I wouldn't fault a pass.
I think that eating up the two level bidding space is sufficiently valuable that I am willing to risk a 3 level contract.
if we settle in 3M, I have a supporting honor for partner which will make it difficult for the opponents to make a penalty double stick.
Playing a more standard style, I am going to pass.
My diamonds are neither long enough nor strong enough that I think that they will play better than partner's suit, nor do I want a Diamond lead going into me if we are defending.