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SPY Rebounds Into Resistance — Compression Builds Between Key Levels

Market Analysis
January 25, 2026•3 min read
SPYdaily12626

📆 DAILY CHART OUTLOOK — SPY

Week of January 26, 2026

Last week was a story of violent rejection, swift recovery, and now… consolidation.

Markets opened Tuesday after the Monday holiday with a sharp gap down, slicing through key levels and landing between the 50SMA and 100SMA. The reaction? Immediate reversal.

🔁 Tuesday → Wednesday: Major Support Test + Bullish Reversal

  • Tuesday’s close was below the lower Bollinger Band and within the danger zone but Wednesday opened strong.

  • SPY reclaimed the 50SMA decisively and triggered a SwingTraderPro “Buy,” pushing straight to three targets intraday before fading into the close.

  • That surge officially canceled the nascent bear flag that had begun forming off the previous week’s high and kickstarted what may now be an emerging bull flag instead.

📉 Thursday → Friday: Choppy Follow-Through Above Resistance

  • Thursday opened above key weekly/monthly resistance at 689.7, but intraday selling brought price back below, trapping SPY in a tight chop.

  • Friday was an inside day, consolidating just under resistance signaling indecision, but still holding cleanly above daily bull flag resistance at 683.67.

⏳ Current Structure = Compression Between Key Levels

With Friday’s close at 689.23, price is now wedged between:

  • 683.67 – Daily bull flag resistance (now acting as minor support)

  • 689.7 – Weekly/monthly resistance

This is classic consolidation following a sharp reversal and it’s likely to resolve with a squeeze.

🧭 What to Watch This Week

  • Bullish Flag Continuation: If price continues forming higher highs and higher lows on the daily chart, that confirms the active bull flag remains in play. The strength of that structure will be revealed by how far price can push — whether it simply reclaims 689.7 or pushes through the recent bear flag high near 695.45. Expect resistance in that zone either way. A healthy pullback from there into the 689.7 area could establish a higher low within the pattern and set up a clean continuation toward the weekly target at 716.3.

  • Neutral Scenario: Ongoing chop between 683.67 and 689.7 would continue compressing price. Expect Bollinger Bands to tighten further and a squeeze to develop — this path builds pressure, but delays resolution.

  • Bearish Breakdown Setup: A strong close below the 50SMA with Bollinger Bands starting to tilt and expand lower would invalidate the current bull flag. That opens the door for a proper bear flag to build, which could shift short-term control to sellers and put the 100SMA and broader support zone back in focus.

🎯 Bottom Line

The bounce off support was clean, but not explosive. This is now a market waiting for structure — and the job is to stay patient until a new pattern confirms.

This remains:

  • A trader’s environment, not an investor’s one

  • A time to favor intraday setups (like ORBI)

  • A moment to only swing names showing real trend, not just grinding

Avoid overnight exposure unless a setup is truly clean — this tape continues to punish theta holders with whipsaws and fakeouts.

Let structure guide — and don’t force conviction before price confirms.

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