A review of the SPY daily price action last Friday firms up my belief that more downside is coming.
1. 9 day moving average:
When price is in an uptrend, price stays above 9 day moving average. However on June 15th when SPY gapped below 9 day moving average and failed to reclaim it, price has been tagging it from below and has been capped by it. Now 9 day moving average is clearly slopped down, suggesting that much more downward movement is coming.
2. Failure to break the black downward trendline, and the bottom of the gap created on June 25th.
Gaps are often where big money builds positions. The fact that SPY got rejected at that level, which was also the down trendline, suggests that downward pressure is still strong at the moment. Notice that this comes at the heel of a bullish divergence at key support level 270. This is not good for the bulls and suggests that the bullish divergence may NOT play out. In particular, look at the selling volume in the last hour!
3. Failure to reclaim the upward green trendline, making it a backtest.
Remember that the upward green trendline was the long term trendline that started in 2016. This suggests that more downside is coming. We are probably looking at at least what happened at the end of March. With fed's HUGE QT coming this weekend, July is going to start off with a BANG. We are looking at least 266 next week. If breached, we are probably going on to test 260-262 area.
Potential bullish development given the coming holiday is that we go for another up day or two. The key for the upside is 273 level. If 273 cannot be taken out, then SPY could be setting up for an H&S pattern with head already likely confirmed. The fully played out price target for this formation is 158, the yearly low.
1. 9 day moving average:
When price is in an uptrend, price stays above 9 day moving average. However on June 15th when SPY gapped below 9 day moving average and failed to reclaim it, price has been tagging it from below and has been capped by it. Now 9 day moving average is clearly slopped down, suggesting that much more downward movement is coming.
2. Failure to break the black downward trendline, and the bottom of the gap created on June 25th.
Gaps are often where big money builds positions. The fact that SPY got rejected at that level, which was also the down trendline, suggests that downward pressure is still strong at the moment. Notice that this comes at the heel of a bullish divergence at key support level 270. This is not good for the bulls and suggests that the bullish divergence may NOT play out. In particular, look at the selling volume in the last hour!
3. Failure to reclaim the upward green trendline, making it a backtest.
Remember that the upward green trendline was the long term trendline that started in 2016. This suggests that more downside is coming. We are probably looking at at least what happened at the end of March. With fed's HUGE QT coming this weekend, July is going to start off with a BANG. We are looking at least 266 next week. If breached, we are probably going on to test 260-262 area.
Potential bullish development given the coming holiday is that we go for another up day or two. The key for the upside is 273 level. If 273 cannot be taken out, then SPY could be setting up for an H&S pattern with head already likely confirmed. The fully played out price target for this formation is 158, the yearly low.
Note
Another rejection from the resistance, however support was not attacked. Market should be waiting on tradwar news. Now this thing can go either way.
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.