S&P 500 Stuck In A Bind: Up Or Down? 😅
Thanks to Tiger for awarding the weekly top predictions for SPY again. From a technical analysis perspective in the week ahead, the SPY ETF shows both bullish and bearish patterns on the daily chart.
It’s trading in a confirmed uptrend but also settling into a possible bear flag formation probably expecting volatility from AAPL wanderlust and CPI data on Tuesday and Wednesday respectively.
An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.
The higher highs indicate the bulls are in control while the intermittent higher lows indicate consolidation periods.
Meanwhile, a bear flag pattern is created with a steep drop lower forming the pole, which is then followed by a consolidation pattern that brings the stock higher between a channel with parallel lines or into a tightening triangle pattern.
The SPY’s recent uptrend started on Aug. 18, when the ETF reversed course from the $433 level and subsequently printed a series of higher highs and higher lows. The most recent higher high was formed on Sept. 1 at $453.67 and the most recent confirmed higher low was printed at the $442.75 level on Thursday.
If the uptrend is set to continue, traders want to see the SPY continue to rise next week to form another higher high. If the SPY falls lower on Monday, Friday’s high-of-day will serve as a lower high, which will negate the uptrend.
The SPY’s possible bear flag pattern was formed between Sep 1 and Friday, with the downward sloping pole created over the first four days of that timeframe and the flag forming since. If the SPY drops through the flag formation on higher-than-average volume, the measured move of the pattern is about 2.4%, which suggests the ETF could fall toward $436.
Good news for traders early in the week as volatility brings opportunities. Direction will be clearer after mid week’s CPI reading. The SPY has resistance above at $447.06 and at $454.05 and support below at $436.79 and at $429.80.
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Modify on 2023-09-11 10:24
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