Analyzing SPY's Current Technical SetupAfter a strong downward momentum observed on the daily timeframe, SPY has shown signs of a potential reversal on the lower timeframe (65-minute chart).
Here's the breakdown:
SPY has seen a significant bearish move recently, breaking through key support levels and establishing a new recent low around the critical Half 2 Short target at $486.41. This sharp bearish action indicates strong selling pressure, as evidenced by high volume spikes accompanying the down move. The Relative Strength Index (RSI) on the daily has reached oversold territory (around 20), suggesting potential for a short-term bounce or consolidation.
65-Minute Chart Analysis:
On the shorter timeframe, SPY is showing a recovery phase, with the price reclaiming the Half 1 Short level at $508.91. The upward price action is supported by rising RSI, now trending upward above the mid-level (50), signaling short-term bullish momentum. Volume is moderately strong, suggesting buyer participation.
Trade Idea and Levels:
- Bullish Scenario:
- Entry: I deally, an entry would be considered on a confirmed hold above $508.91.
- Profit Targets:
- First target: Weeks High Short at approximately $520.16.
- Second target: High Sell Target around $531.41 (more optimistic scenario if bullish momentum strengthens).
- Stop Loss: Clearly set a stop below the recent pivot low at approximately $497.50 for risk management.
- Bearish Scenario:
- If price fails to sustain above $508.91 and reverses downwards:
- Entry: Consider short entry upon confirmed rejection below $508.91.
- Profit Targets:
- First target: Recent pivot low at $497.50.
- Second target: Half 2 Short at $486.41.
- Stop Loss: S et stop above $513, allowing for minor volatility without compromising risk control.
Final Thoughts:
Given the current oversold conditions on the daily timeframe and emerging bullish signs on the shorter timeframe, cautious bullish entries with tight stops could present favorable risk-to-reward setups. However, remain flexible to shift to a bearish stance if the price action fails to sustain the critical $508.91 level. Always manage risk accordingly and adjust positions based on ongoing market confirmation.
