SPY Weekly Outlook – Week 3 of 2026 (Jan 19–23)SPY Weekly Outlook – Week 3 of 2026 (Jan 19–23)
Technical Look:
As expected last week, price found support at the 687.5 level and continued its upside move. We discussed that if SPY failed to push toward 700 on Monday’s open, a post CPI pullback toward 687.5 could occur. That scenario played out precisely on Wednesday, with price retracing into the 687.5 zone and finding support there.
As I mentioned in my Wednesday Mid Week Update, this reaction marked a shift back to a bullish structure, with upside targets at 691.75 – 694 – 695.25. I also stated that I would exit all call positions at 695.25, and price reached that level exactly before getting rejected.
(Please refer to the linked idea for visual reference.)
Scenarios – Prediction:
At this point, I am tracking two possible scenarios for SPY.
Scenario 1: Bearish Scenario (Higher Probability)
This is currently the more likely scenario, mainly due to the macro backdrop, including Trump–EU tensions and potential EU tariffs related to Greenland.
I believe price may open the week with a sharp downside move.
My bearish targets are:
686 – 679.75 – 669.5
If price breaks 686 aggressively and closes a 4H candle below it, I would expect a move toward 679.75.
Similarly, if 679.75 is broken decisively and holds below, price could extend toward 669.5.
Each of these bearish targets also represents a potential bounce or reversal zone, so I prefer taking partial profits (around 1/3) at each level.
If price breaks 686 decisively, I would look to engage on the short side using put options.
Scenario 2: Bullish Scenario
This scenario becomes valid only if Trump EU tensions ease before the market opens (with Monday being a holiday and trading resuming on Tuesday).
The 695 level acts as a call wall in options positioning for SPY. If price breaks above 695 aggressively, I would look to buy calls on a retracement, targeting a move toward the 700 area.
Position Management Notes:
I manage risk by scaling out of positions at key reaction levels and adjusting exposure as structure confirms. Partial profit-taking at major levels is a core part of my approach.
I share deeper US Market breakdowns and weekly scenario updates on Substack. Link is in my profile.
This analysis is for educational purposes only and reflects my personal opinion. It is not financial advice.
Short
