SPY: Reversing the Trend? |D&H charts analysis|Daily Chart (Left Side)
On the daily chart, SPY has experienced a sharp decline after failing to sustain its upward momentum near the resistance level of $565.16. This pullback has brought the price back below the support level at $554.86, which previously acted as a resistance and support area.
The 21-day EMA, which had been providing support, has now been breached, indicating a potential shift in momentum. The next significant support level is at $544.96, highlighted by the red line on the chart. This level corresponds with the previous open gap on teh daily chart. Remember, gaps work as magnets when the trend reverses. A break below this level could lead to further downside toward the $510.75 level, which is the next major support.
1-Hour Chart (Right Side)
On the 1-hour chart, SPY has been in a downtrend after a failed breakout attempt above the $563.17 resistance level.
The price action shows a clear breakdown from the support at $554.86, which had been tested multiple times before giving way. The downward momentum is evident as the price is making lower highs and lower lows. The next support level to watch is the $544.96 area, which aligns with the daily chart's significant support.
Key Levels to Watch
Resistance: $554.86 (previous support, now resistance), $565.16 (major resistance on the daily chart).
Support: $544.96 (critical support on both daily and hourly charts), $510.75 (major support on the daily chart).
Summary
SPY is showing signs of bearish momentum after a failed breakout attempt and a breach of key support levels. The 21-day EMA has been breached, signaling a potential shift in trend. The price is currently testing the $552 level on the hourly chart, with the next significant support at $544.96. If this support fails to hold, SPY could see a further decline toward the $510.75 level.
Could SPY reject tihs bearish thesis? Yes, but it would need to make a clear bottom sign as soon as possible, and for now, we don't see any.
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Nathan.
