SPY Pullback in an Ascending Channel. Dec 6, 2024SPY continues to respect an ascending channel but is currently pulling back from the upper boundary. The price action suggests a potential for further retracement or a bounce from support levels. With increasing selling momentum, tomorrow's session will be key to determining whether SPY maintains its bullish structure or breaks down. Here’s a detailed analysis and playbook for scalpers and swing traders.
Market Structure Overview:
* Trend: SPY remains in a bullish uptrend, trading within a clean ascending channel. The pullback, however, suggests short-term weakness.
* Current Price Action:
* The price has dropped below $606.22 and is heading toward the midline of the channel.
* Selling volume is increasing, signaling bearish momentum in the short term.
Key Levels to Watch:
* Resistance:
* $608.48: Immediate resistance at the recent high.
* $612: Upper channel boundary, acting as strong resistance.
* Support:
* $602.43: First level of support, aligned with previous consolidation.
* $597.32: Major horizontal support and the lower boundary of the channel.
* $594.15: Critical support level if the channel breaks down.
Liquidity Zones & Order Blocks:
* Liquidity Zones:
* Significant liquidity is below $602.43, with stops likely clustered near $600-$598.
* Order Blocks:
* Bullish OB: Between $597-$600, aligning with the lower channel boundary.
* Bearish OB: Near $608-$610, where selling pressure has emerged.
MACD & Volume Analysis:
* MACD: Shows bearish momentum as the MACD line crosses below the signal line, indicating potential for further downside.
* Volume: Selling volume is increasing, confirming the pullback, but watch for volume spikes near key support zones.
My Thoughts on Tomorrow’s Direction:
Tomorrow’s session will depend heavily on how SPY interacts with the $602-$597 support zone. Here’s what I expect:
1. Bullish Scenario:
* If SPY holds above $602 and we see buying volume during the pre-market or early trading session, expect a bounce back toward $606-$608. A break above $608 could lead to a retest of the $612 upper channel resistance.
* Catalysts such as positive economic data or strong tech sector performance could trigger this move.
2. Bearish Scenario:
* If SPY fails to hold $602 and breaks below $600, we could see accelerated selling toward $597 and potentially $594.
* Watch for increasing bearish volume and rejection near $602 on intraday tests to confirm a further move lower.
3. Key Indicator to Watch:
* Volume: Rising bullish volume near $602 would signal a potential reversal. Conversely, increasing bearish volume below $602 could confirm further downside.
Scalping Strategy:
* Entry:
* Long scalps at $602-$603 if the price shows signs of holding the support level.
* Short scalps at $606-$608 if price rejects resistance again.
* Exit:
* For longs, take profits near $605-$606.
* For shorts, target $600-$598.
* Stop-Loss:
* For longs: Below $600.
* For shorts: Above $608.50.
Swing Trading Strategy:
* Bullish Play:
* Wait for a bounce at $597-$600 support zone and enter long. Target $608, then $612 if momentum resumes.
* Bearish Play:
* If SPY fails to reclaim $606 convincingly, consider shorting with targets at $597 or lower.
* Stop-Loss:
* For longs: Below $597.
* For shorts: Above $608.
Game Plan for SPY Trading:
1. Pre-Market Prep:
* Monitor overnight futures to gauge sentiment.
* Mark $606 (resistance) and $597 (support) for intraday reactions.
2. Market Open Strategy:
* Observe the first 15-30 minutes to confirm direction.
* Look for rejection or bounce at key levels before entering trades.
3. Intraday Execution:
* Use the ascending channel to guide entries and exits.
* Keep a close eye on volume spikes for confirmation.
4. End of Day:
* Close intraday positions and reassess swing setups based on the closing structure.
Disclaimer:
This analysis is for educational purposes only and is not financial advice. Always conduct your own research and trade responsibly.
