SPY gave us a solid sell. Is it still bearish?
Last time we looked at SPY (April 11, see chart below), we got what we wanted, a break below the 1D MA50 (blue trend-line) that met our exact bearish expectation which was a -5.93% decline, absolutely symmetrical with August 18 2023:
As the subsequent rebound got rejected on the 1D MA50 (blue trend-line on the chart above), the question is the following: Is SPY still bearish?
Technically, yes as long as it closes weekly (1W) candles below the 1D MA50. But at the same time, being supported on the 1D MA100 (green trend-line on the chart above), keeps short term neutral/ ranged thus the expectations for a bullish break-out live. But it has to close above the 1D MA50 to confirm that.
As you can see, a comparison with recovery patterns following systemic Cycle corrections like the one in 2022, offers valuable conclusions. Basically, since the 2009 bottom of the U.S. Housing Crisis, the three major corrections of the current Cycle, have followed similar patterns (2011 - 2013, 2015 - 2017 and 2022 - 2024). The key common characteristic is that the 1W MA50 (red trend-line) has been the major Support.
After two pull-backs that hit the 1W MA50 straight after the correction's bottom, both the 2011 - 2013 and 2015 - 2017 fractals made a smaller pull-back (green Rectangle) that hit the 1D MA100. It appears that this is where the index is currently at. If this correlation continues to hold and the index won't dive further to the 1W MA50, it might hit the 2.0 Fibonacci extension as its first Target, which is what the other two fractals aimed at. That is at 555.00. Notice also the similarities between the 1W RSI patterns.
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As the subsequent rebound got rejected on the 1D MA50 (blue trend-line on the chart above), the question is the following: Is SPY still bearish?
Technically, yes as long as it closes weekly (1W) candles below the 1D MA50. But at the same time, being supported on the 1D MA100 (green trend-line on the chart above), keeps short term neutral/ ranged thus the expectations for a bullish break-out live. But it has to close above the 1D MA50 to confirm that.
As you can see, a comparison with recovery patterns following systemic Cycle corrections like the one in 2022, offers valuable conclusions. Basically, since the 2009 bottom of the U.S. Housing Crisis, the three major corrections of the current Cycle, have followed similar patterns (2011 - 2013, 2015 - 2017 and 2022 - 2024). The key common characteristic is that the 1W MA50 (red trend-line) has been the major Support.
After two pull-backs that hit the 1W MA50 straight after the correction's bottom, both the 2011 - 2013 and 2015 - 2017 fractals made a smaller pull-back (green Rectangle) that hit the 1D MA100. It appears that this is where the index is currently at. If this correlation continues to hold and the index won't dive further to the 1W MA50, it might hit the 2.0 Fibonacci extension as its first Target, which is what the other two fractals aimed at. That is at 555.00. Notice also the similarities between the 1W RSI patterns.
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** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. **
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