SPY Faces Key Support Test! A Reversal or Breakdown Ahead? Jan3
Technical Analysis:
1. Trend Overview:
* SPY is consolidating within an ascending wedge pattern but is now testing critical support levels near $598.
* MACD shows bearish momentum as the histogram dives deeper into negative territory.
* Stochastic RSI has entered oversold territory, hinting at a potential bounce but no confirmation yet.
2. Support and Resistance:
* Immediate Support: $598.
* Key Resistance: $610, aligned with the highest positive NETGEX wall.
3. Volume:
* The recent decline is supported by increasing volume, signaling strong selling pressure.
GEX and Options Perspective:
1. Gamma Levels:
* Resistance: $610 (highest positive NETGEX), followed by $615.
* Support: $598 and $595 as critical PUT walls with -59.64% and -67.37% negative gamma concentrations, respectively.
* Extreme Bearish Zone: Below $590, where PUT dominance may accelerate downside moves.
2. Implied Volatility and Sentiment:
* IVR: 19.4 indicates moderate volatility.
* IVx average: 15.7, showing slightly elevated implied volatility compared to historical norms.
* PUT$ dominance at 70.3% highlights bearish sentiment in the options market.
Trade Scenarios:
1. Bullish Setup:
* Entry: Above $601 with confirmation of strong buying volume.
* Target: $610, with a stretch target at $615.
* Stop-Loss: Below $598.
2. Bearish Setup:
* Entry: Below $598, confirming a breakdown from support.
* Target: $590, with an extended target at $585.
* Stop-Loss: Above $601.
Actionable Suggestion:
* Watch for a reversal signal at $598, potentially confirmed by bullish divergence on MACD and Stochastic RSI.
* In case of a breakdown, consider aligning trades with PUT-heavy zones below $595 for downside continuation.
Disclaimer: This analysis is for educational purposes only and does not constitute financial advice. Always perform your due diligence and manage your risk effectively.
1. Trend Overview:
* SPY is consolidating within an ascending wedge pattern but is now testing critical support levels near $598.
* MACD shows bearish momentum as the histogram dives deeper into negative territory.
* Stochastic RSI has entered oversold territory, hinting at a potential bounce but no confirmation yet.
2. Support and Resistance:
* Immediate Support: $598.
* Key Resistance: $610, aligned with the highest positive NETGEX wall.
3. Volume:
* The recent decline is supported by increasing volume, signaling strong selling pressure.
GEX and Options Perspective:
1. Gamma Levels:
* Resistance: $610 (highest positive NETGEX), followed by $615.
* Support: $598 and $595 as critical PUT walls with -59.64% and -67.37% negative gamma concentrations, respectively.
* Extreme Bearish Zone: Below $590, where PUT dominance may accelerate downside moves.
2. Implied Volatility and Sentiment:
* IVR: 19.4 indicates moderate volatility.
* IVx average: 15.7, showing slightly elevated implied volatility compared to historical norms.
* PUT$ dominance at 70.3% highlights bearish sentiment in the options market.
Trade Scenarios:
1. Bullish Setup:
* Entry: Above $601 with confirmation of strong buying volume.
* Target: $610, with a stretch target at $615.
* Stop-Loss: Below $598.
2. Bearish Setup:
* Entry: Below $598, confirming a breakdown from support.
* Target: $590, with an extended target at $585.
* Stop-Loss: Above $601.
Actionable Suggestion:
* Watch for a reversal signal at $598, potentially confirmed by bullish divergence on MACD and Stochastic RSI.
* In case of a breakdown, consider aligning trades with PUT-heavy zones below $595 for downside continuation.
Disclaimer: This analysis is for educational purposes only and does not constitute financial advice. Always perform your due diligence and manage your risk effectively.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.