SPY Faces Key Support Test! A Reversal or Breakdown Ahead? Jan3

Technical Analysis:
1. Trend Overview:
* SPY is consolidating within an ascending wedge pattern but is now testing critical support levels near $598.
* MACD shows bearish momentum as the histogram dives deeper into negative territory.
* Stochastic RSI has entered oversold territory, hinting at a potential bounce but no confirmation yet.

2. Support and Resistance:
* Immediate Support: $598.
* Key Resistance: $610, aligned with the highest positive NETGEX wall.

3. Volume:
* The recent decline is supported by increasing volume, signaling strong selling pressure.

GEX and Options Perspective:


1. Gamma Levels:
* Resistance: $610 (highest positive NETGEX), followed by $615.
* Support: $598 and $595 as critical PUT walls with -59.64% and -67.37% negative gamma concentrations, respectively.
* Extreme Bearish Zone: Below $590, where PUT dominance may accelerate downside moves.

2. Implied Volatility and Sentiment:
* IVR: 19.4 indicates moderate volatility.
* IVx average: 15.7, showing slightly elevated implied volatility compared to historical norms.
* PUT$ dominance at 70.3% highlights bearish sentiment in the options market.

Trade Scenarios:
1. Bullish Setup:
* Entry: Above $601 with confirmation of strong buying volume.
* Target: $610, with a stretch target at $615.
* Stop-Loss: Below $598.

2. Bearish Setup:
* Entry: Below $598, confirming a breakdown from support.
* Target: $590, with an extended target at $585.
* Stop-Loss: Above $601.

Actionable Suggestion:
* Watch for a reversal signal at $598, potentially confirmed by bullish divergence on MACD and Stochastic RSI.
* In case of a breakdown, consider aligning trades with PUT-heavy zones below $595 for downside continuation.

Disclaimer: This analysis is for educational purposes only and does not constitute financial advice. Always perform your due diligence and manage your risk effectively.