Falling flag taking shape in SPY
Before looking at the falling flag on the 60-minute chart, let's review some candlestick action on the daily chart. There is no change in the overall analysis as SPY appears to be developing a falling price channel. A break above 111.10 would throw cold water on this theory. I added a 10 cent buffer to 111. RSI is also meeting resistance in the 50-60 area. A break above 60 would be bullish for momentum. With a gap down and strong close, SPY formed a long hollow red candlestick. These are interesting candlesticks because they show a reversal off the lows and strong close. I would be especially impressed if this candlestick formed after an extended decline. So far, I am mildly impressed with yesterday's price action, but I would like to see follow through with a breakout at 111.10.
On the 60-minute chart, SPY has a falling flag working over the last few days. A move above 111.10 would break flag resistance and call for a continuation of the prior advance. The upside target would be the January highs around 115 and the flag low would turn into support. RSI is back in the 50-60 zone. A break above 60 would be short-term bullish for RSI.
