SPY reveals a setup for a short-term bearish swingThe analysis across both the daily (or 4-hour) and 30-minute charts of SPY reveals a high-probability setup for a short-term bearish swing. The primary signal, a classic Volume Price Analysis (VPA) indication of weakness, is the significant bearish divergence between price and volume. As the price has rallied to new highs over the past several sessions, the volume has been consistently decreasing. This 'No Demand' rally suggests a lack of professional participation and conviction, making the uptrend fragile and susceptible to a reversal.
On the longer timeframe chart, we observe price approaching an upper trend line resistance. Concurrently, the candles are becoming smaller, indicating a loss of upward momentum and exhaustion among buyers. This price action at a key resistance level, combined with declining volume, is a strong signal of distribution.
The 30-minute chart confirms this weakness on a granular level. The final push to the highs is not accompanied by a spike in volume; instead, the volume is subdued. This lack of 'effort' to break out suggests the move is likely a false breakout or an 'up-thrust' designed to trap eager buyers before a move down.
The confluence of these factors—testing resistance, slowing momentum, and most importantly, a clear price/volume divergence—points to a probable swing down over the next 2-10 days. The trade is to sell, anticipating a pullback towards the previous support/consolidation zone.
