The yellow line has previously acted as a long term going as far back as 2014, we broke that level in November of 2020, which gave us a bull run breakout over the trendline. As we now reach the top of the , I feel skeptical of how long buyers will be willing to keep forward momentum as rises, supply chain problems, as well yields rising as bond traders anticipate the Fed raising rates, which I do see as one of the few options they have to combat rising .
If we look at the technical patterns, we see that historically, rising have generally resulted in breakdowns. A pure obviously cannot assume a market breakdown, but there are catalysts that are currently instilling fear and sentiment.
We can also look at a 4HR chart and analyze more recent price action and patterns to see potential paths for SPY . Looking the 4HR, we can see there is also a within the long term , indicating again, a correction. A in a , if you will. If a correction is coming, levels to look out for to find support is the $380 level.
The $380 level is important because of fibonacci wave extension showing support in the $380 level IF a correction is coming, and that extension is based on the previous ATH in May, to yesterdays ATH . So we have our first reason to why $380 is a crucial level. Second, we have the long term trendline shown in yellow, that was a major on a year to year basis, we broke through that trendline, which would indicate it now being a . This level also points towards the $380 level, giving us our second confirmation to why $380 is so important.
Lastly, the major resistance levels in respect to February of 2020's all time high to the trend based resistance levels shown within the purple channel. If SPY continues to show strength for the time being, I expect heavy resistance near the 430-435 level.