The 200-Day Test: Will the Bulls Hold the Line?

24/05/2025
🔎 Insights on the market 🔎

🧭 Detailed Chart Breakdown

✅ Key Resistance Zone: ~596.91 USD

• This level (highlighted in yellow on the chart) aligns with the previous highs from early 2025.

• The SPY faced strong rejection from this zone, forming a bearish candle right at resistance.

• Sellers stepped in aggressively, suggesting that bulls will need momentum and volume to break through this ceiling on a future attempt.

🧷 Major Dynamic Support: 200-Day Moving Average

• The recent pullback landed precisely on the 200-day simple moving average (white line).

• This is a crucial long-term level watched by institutional investors.

• Friday’s candle closed just above it, hinting at a possible bounce — but without confirmation yet.

📉 Short-Term Moving Averages (9, 21, 50 EMA)

• These remain in bullish alignment, which keeps the medium-term structure intact.

• The price is currently below the short EMAs, so reclaiming the 9-day EMA (~585 USD) would be an early signal of renewed bullish control.

📊 Volume Profile

• The selloff occurred on lighter volume compared to the rally that preceded it — a good sign for bulls.

• Lower volume on down days suggests this may be a technical pullback, not a panic-driven selloff.

• Watch for rising volume on green candles next week — that could be a bullish signal.

🔮 Potential Scenarios for the Week Ahead

🟢 Bullish Scenario (base case if macro news is neutral or positive)

• The 200-day SMA holds as a support and buyers step in.

• If the SPY reclaims short-term EMAs, it could retest the 596–597 USD resistance zone.

• A breakout above that range, with conviction, could set the stage for a move toward new all-time highs (600+ USD).

🟠 Neutral Scenario (sideways range)

• The SPY trades between 572 and 588 USD, consolidating after a strong rally.

• A sideways move would allow indicators to reset and shake out weak hands — a healthy pause for a bullish continuation later on.

🔴 Bearish Scenario (less likely but must be monitored)

• A break below the 200-day SMA (~577 USD) on strong volume would be a negative technical signal.

• This could trigger a drop toward the 560–565 USD support area, which aligns with previous consolidation and the 50 EMA.

• A weekly close below that zone would shift sentiment and open the door to a deeper correction.

🔍 Key Catalysts to Watch This Week

• Macroeconomic data: PCE inflation, consumer spending, and any Fed commentary.

• Market narrative: Ongoing geopolitical developments and potential trade agreements (U.S.–EU, China, Ukraine) could swing sentiment.

• Technical signals: Watch volume and candlestick patterns near the 200-day SMA — that’s the battleground.

📝 Bottom Line for Readers