A Series of Charts to Assess Possible Price Area the Stock Market May Bounce To 

Tom Gentile

Posted in
Technical Analysis

By: Tom Gentile
September 9th, 2022

2 mins read

I want everyone to note that when I educate on the markets and reference the equities markets I use the SPDR S&P 500 ETF Trust (SPY).

This educational piece is going to show you three charts on the SPY that may help in assessing a price point the SPY may bounce higher to before we need to decide if it can go higher from or roll over yet again.

Three SPY Charts Analysis

The markets (SPY) are in an overall bearish trend for the year thus far. Markets do not trade higher or lower in a straight line and there are times of rallies higher and then a following run lower that sees the chart on the ETF in a pattern of achieving lower lows and lower highs.

In June, the SPY hit a bottom and rallied higher. It peaked/topped out in August and rolled over yet again.

The retracement off the August high hit a price point of 390 and that has proved to be a support it is bouncing higher over the last three trading days.

Figure 1: 120-Day Candle Chart on SPY
Figure 1: 120-Day Candle Chart on SPY

I may have written about the 390-price point in a previous article. If so this is a reiteration of the price of 390 for SPY that is now a support price since it has bounced higher from that price.

If SPY rolls over and takes out that support we will look for a support price lower.

Should SPY continue to trade higher the question is now how much higher and is that enough of a move we would feel confident in trading bullish option strategies.

Fibonacci View on SPY

Figure 2: 70-day Fibonacci Retracement Chart on SPY
Figure 2: 70-day Fibonacci Retracement Chart on SPY

I figured I would provide a visual of the SPY using 290 as a support. That price is for now a successful test of the 61.8% Fib retracement level.

One can anticipate one of two possible price areas if it continues to trade higher.

One can use a shorter-term period and place the Fib retracement tool on that chart to find fib % retracement zones or anticipate SPY trading to its previous August high.

Here is the third and final chart to emphasize that.

Figure 3: 30-Day Fib Retracement Chart on SPY
Figure 3: 30-Day Fib Retracement Chart on SPY

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