SPY is moving in a range
We have used the 2-hour chart of SPY – SPDR S&P 500 ETF – to better understand the price action of this major index and many others that move in the same fashion lately.
It is evident from the chart that SPY is currently moving in a range, which we mark with the blue box. The upper limit of the range is about 294 and the lower limit is roughly 282.
This is a trendless environment as all moving averages move more or less horizontally and price moves round its moving averages.
Another characteristic worth noting is that the upper limit of the range is just below the upper band of the Bollinger Band.
The heavy volume during the downtrend, within the range, indicates that the prevailing sentiment among traders is fear, as everybody rushes to sell when the trend is down.
We will wait to see if the current lower limit of 282 will hold in an eventual continuation of the downtrend. On the other hand, we will be very cautious till SPY shows that it follows a clear uptrend and breaks above the 294 level, which is the upper limit of the range.