Has The SPY Priced In Russia-Ukraine War, Rate Hikes? A Technical Look At The SPDR S&P 500 Chart

Between Jan. 4 and Feb. 23, the weeks leading up to Russia invading Ukraine, the SPDR S&P 500 SPY fell 12% from the all-time high of $479.98 to the Wednesday low of $421.35.

On Feb. 24, when the market opened with the news a full-scale invasion had begun, the SPY gapped down a further 2.59% but bulls came in and bought the dip, which caused the ETF to rally up 4.2% off the open and close the trading day up 1.65% higher than the previous day’s close.

On Friday, the SPY gapped up slightly higher but lower-than-average volume was causing the SPY to trade within a tight trading range, which indicates consolidation may be needed.

The market is considered to be forward-thinking, so there is a possibility the Russia-Ukraine war and other upcoming events that have weighed on stocks recently, such as the likelihood the Federal Reserve will hike rates next month, have already been digested. If this is the case, the SPY could be headed higher.

It could also be the case that the market has been unable to price in the economical and global events because there is not yet enough information, which could indicate Thursday’s bullish bounce was merely a short-term bull run within a larger bearish cycle.

The daily SPY chart is also in a period of indecision but there are specific indicators and patterns that can be watched, which will eventually indicate whether more downside is on the way or if a reversal to the upside is in the cards.

See Also: How The Stock Market Performs In Times Of War

The SPY Chart: SPY entered into a downtrend on the daily chart on Feb 9 after printing a bearish double top pattern at the $458.49 level when paired with the price action on Feb. 2. The SPY has since printed a lower high and a lower low to confirm the downtrend.

The massive Marubozu candlestick the SPY printed on Thursday indicated higher prices would come on Friday and as of Friday morning, the SPY was trading up about 0.8% higher. It is not clear yet, however, if the SPY is undergoing a bounce or a larger trend change.

If the SPY closes the trading day near its high-of-day price it will print another bullish Marubozy candlestick, which could indicate higher prices will come on Monday.

The SPY has confirmed it's trading in an hourly uptrend, by printing a higher low and a higher high. Next, bullish traders will want to see the SPY print a higher low on the four-hour chart, which will give bulls more confidence going forward. If a higher low is printed on the four-hour chart, bulls can watch to see if the SPY confirms a trend change on the daily chart.

With the SPY trading in an hourly uptrend, short-term scalpers may find trades available by entering on the hourly higher low and exiting on the higher high. Longer-term traders will want to wait until the SPY confirmed a trend change on larger timeframes.

If the SPY bounces up higher, bearish traders can watch for the SPY to print a reversal candle, such as a shooting star or doji below the most recent lower high near $448. If the SPY closes the trading day on Friday near its opening price it will print a doji, which may indicate lower prices will come on Monday.

The SPY has resistance above at $433.69 and $437.92 and support below at $425.46 and $420.76.

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