Uptrend Culmination and Initial Exhaustion Signals
SPY experienced a strong bullish run leading up to November, at which point a notable change of behavior emerged, marking the potential end of the advance. This was followed by a secondary test that displayed clear signs of exhaustion (highlighted by the first yellow line), where buying momentum failed to sustain prior highs.
Trading Range Dynamics and Weakening Demand
Within the subsequent trading range, price has notably avoided dropping back to the prior support level established during the change of behavior. Instead, it has hovered above this zone, which paradoxically indicates diminishing demand—buyers are not defending aggressively. Concurrently, downswings have intensified, gaining strength and suggesting sellers are gradually taking control.
Near-Term Bias & Expected Swing
The recent exhaustion in demand has been pronounced, culminating in today's sharp drop, which reinforces the likelihood of a retest toward the lower support (the change of behavior zone). This downside move appears poised to probe for liquidity and flush out weak positions. However, post-drop observations show limited seller follow-through overall, implying this could be manipulative in nature (a shakeout). Once resolved, it sets the stage for a potential rally pushing into new highs, provided demand reasserts itself convincingly.
Key Levels to Watch
Resistance: Recent highs from the trading range (breakout here would accelerate bullish case)
Support: Change of behavior zone below; expect retest or minor undercut in a shakeout
Invalidation (bearish escalation): Sustained break below support with increasing volume/seller conviction
Invalidation (early bullish): Strong rebound from support with fresh demand signals
Trade with caution—anticipate the probable near-term downside retest while monitoring for exhaustion cues that could trigger the reversal. Position sizing and stops are critical in this volatile setup.
SPY experienced a strong bullish run leading up to November, at which point a notable change of behavior emerged, marking the potential end of the advance. This was followed by a secondary test that displayed clear signs of exhaustion (highlighted by the first yellow line), where buying momentum failed to sustain prior highs.
Trading Range Dynamics and Weakening Demand
Within the subsequent trading range, price has notably avoided dropping back to the prior support level established during the change of behavior. Instead, it has hovered above this zone, which paradoxically indicates diminishing demand—buyers are not defending aggressively. Concurrently, downswings have intensified, gaining strength and suggesting sellers are gradually taking control.
Near-Term Bias & Expected Swing
The recent exhaustion in demand has been pronounced, culminating in today's sharp drop, which reinforces the likelihood of a retest toward the lower support (the change of behavior zone). This downside move appears poised to probe for liquidity and flush out weak positions. However, post-drop observations show limited seller follow-through overall, implying this could be manipulative in nature (a shakeout). Once resolved, it sets the stage for a potential rally pushing into new highs, provided demand reasserts itself convincingly.
Key Levels to Watch
Resistance: Recent highs from the trading range (breakout here would accelerate bullish case)
Support: Change of behavior zone below; expect retest or minor undercut in a shakeout
Invalidation (bearish escalation): Sustained break below support with increasing volume/seller conviction
Invalidation (early bullish): Strong rebound from support with fresh demand signals
Trade with caution—anticipate the probable near-term downside retest while monitoring for exhaustion cues that could trigger the reversal. Position sizing and stops are critical in this volatile setup.
Note
We had a really good up bar on some news recently but look at where the day started. Much lower than the previous close opening with a gap down, moving p with excitement and not being able to reach the previous high. Interesting how that excitement ended so fast. We could exhaust supply from here and move up sure, but before we see any supply exhaustion my Bias is still to the downside as all this feels just a temporary moveNote
Beautiful local retest showed weakness and now we're dropping. possibility of reaching Support
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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.