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Make Money From this Technical Analysis Right Now.

  • SPY is currently trading around $539.12, down -0.90% on the day.
  • After a strong recent drop, it’s in the middle of a bounce.
  • It rejected at the 200 SMA (orange line) near $573 during the fall — a key resistance now.
  • It’s below all major moving averages (20 EMA, 50 EMA, 200 SMA) – a sign of weakness.

📊 Indicators:

  • RSI (14): 45.90 → Neutral, but recovering from oversold.
  • Stochastic RSI: ~83 → Overbought, signaling potential for pullback.

⚠️ Context:

  • Recent strong downtrend, and this bounce might just be a bear market rally.
  • Price is approaching resistance from prior support around the $545–$550 zone.

✅ Best Trade Setup Right Now (High-Probability):

Bearish Reversal Play: Call Credit Spread on SPY

You can take advantage of the potential rejection at resistance near the 545–550 level.

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🧠 Setup:

  • Trade Type: Bearish Credit Spread (Call Spread)
  • Sell 1 SPY $550 Call
  • Buy 1 SPY $555 Call
  • Expiration: 1–2 weeks out (short-term theta decay + event-driven selloff potential)
  • Goal: Price stays below $550 through expiration

📈 Risk/Reward Example:

  • Credit: ~$1.00 per spread ($100)
  • Max loss: $4.00 per spread ($400)
  • ROI: ~25% in 1-2 weeks if SPY stays below 550

🧭 Exit Plan:

  • Hold until expiration if SPY stays under $550.
  • Stop out if SPY breaks above $555 on strong volume.

🔒 Alternative Conservative Play:

If you're more cautious but still bearish short-term:

Buy a Put Debit Spread

  • Buy SPY $535 Put
  • Sell SPY $525 Put
  • Expiration: 2–3 weeks out
  • This gives you directional bearish exposure with defined risk.

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You’ll discover:

  • How we use Elliott Wave setups like this to time weekly income trades
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🔍 Elliott Wave Analysis – SPY Daily Chart (Current)

From a high-level view, here's a likely interpretation of the wave count:

1. Previous Impulse Wave Completed (Wave 1–5)

Looking at the rally from October 2022 to March 2025, this appears to be a 5-wave impulse structure:

  • Wave 1: Oct 2022 bottom → Dec 2022 rally
  • Wave 2: Dec 2022 → March 2023 pullback
  • Wave 3: March 2023 → July 2024 (strong, extended bullish leg)
  • Wave 4: July 2024 → October 2024 (sideways consolidation)
  • Wave 5: October 2024 → March 2025 top

✅ This structure fits cleanly and aligns with Elliott Wave’s guidelines:

  • Wave 3 is not the shortest
  • Wave 4 does not enter Wave 1 territory
  • Wave 5 ends in a blow-off top pattern before the current drop
Uploaded image

2. Current Move = Corrective Wave (Likely Wave A of ABC)

  • From the March 2025 top, SPY has entered a sharp drop — likely Wave A of a larger ABC correction.
  • The recent bounce (last few candles) may be part of Wave B, which typically retraces 38%–61% of Wave A.
  • If this is correct, Wave C down is likely next, with SPY potentially heading toward:
    • $510 (support zone)
    • Or even $495–$485 if Wave C extends

🔮 What Elliott Wave Implies for a Trade Right Now:

  • We’re likely in Wave B of a bearish ABC corrective pattern.
  • Once Wave B completes (near 545–550 resistance), the next high-probability move is Wave C down.

This aligns perfectly with the bearish call credit spread we discussed earlier.

✅ Elliott Wave Trade Plan

Setup: Prepare to trade the Wave C leg

  • Direction: Bearish
  • Entry: Around $545–$550
  • Target: $500–$510
  • Strategy: Put debit spread or call credit spread (as outlined above)

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