SPX Breakdown or Breakout?

and a bit on biases and how to reset!

Author

Emanuela Elias
July 13, 2025

I came into last week with a bullish bias, and then by Friday I had to close/reduce some of my newer positions at a loss (including PYPL, which I will discuss further down). The Monday/Tuesday pullback didn’t throw me off, since we had already talked about expecting a few red days. What has thrown me off and what I’ve been processing this weekend is: even though the overall market was flat, a few of my individual picks pulled back. And anytime I see my account swing +$10K in unrealized gains only to watch it evaporate by the afternoon, it definitely plays into my bias (and emotions…and ego 😂).

The difference now is that I am consciously aware of this emotional shift, and I understand how it can affect my next decisions. So when I notice this change happening, my priority becomes: getting back to objectivity, even if it means letting a few names or ideas go for now.

When you feel your bias shifting, whether it’s from a tough day or two, or a string of good ones, here are a few things that may help you reset and ground:

  • Zoom out to regain perspective. Start with the weekly, it is much smoother and a lot less dramatic than the price action on the hourly and daily chart. Then, zoom out as you look at your daily chart. Ask questions like: What is the overall price doing? How long has the price been doing this? What level or moving averages are we at?

  • Revisit your risk management rules. Go back to your original plan: What setup did you use? Is the price action now invalidating that setup? Are you still within your hard stops?

  • Notice the urge to fix. If you’re feeling reactive, that might be your cue to pause, not push. Sometimes when your new trades don’t work, it is a sign to sit out and just observe. Sometimes they aren’t working because we are coming into a period of chop or retracement. Other times they aren’t working because your emotions are clouding your objectivity, and you are taking reactive action instead of sitting still and letting something play out.

  • Don’t let short-term pain override long-term goals. One red day or week doesn’t rewrite your story. Review your quarterly and annual goals and stay committed to your path.

  • Name what you’re feeling. Sometimes it’s not the market, it’s just fear, frustration, or attachment talking. Calling out what you are feeling and experiencing helps you maintain objectivity. What you feel does not determine what the market will do. Sometimes you are afraid your position will reverse and it does. Sometimes it doesn’t. Your feelings have no impact on what the market does. So name it, process it, and get back to your charting.

SPX Outlook

SPX Daily Chart

This week I’ve got a video for you! You can find it here on TradingView. Below are just a few notes to sum up my thoughts:

Indecision at New Highs
After breaking out to new all-time highs, SPX printed a doji on the weekly chart, signaling indecision. This hesitation could mark the start of digestion.

Still Structurally Bullish, but Extended
The weekly chart shows SPX is still holding trend structure, but price is notably extended from the 10EMA. Historically, when price moves too far from key short-term EMAs, it tends to reset either via time (sideways chop) or price (pullback).

Daily Chart Shows a Shelf Forming
On the daily chart, price has been consolidating just under the prior high with small-bodied candles. This is forming a “shelf” around the 6,260–6,280 zone. It’s acting like a pause, not a breakdown. Holding above this zone keeps the trend intact.

Pullback Risk Increases Below 6,232
If price loses 6,232 (last week's breakout area and short-term shelf), it increases the likelihood of a pullback toward the 6160 or even deeper toward the 5970. That lower zone also marks the bottom of the prior consolidation box from earlier this year.

Seasonality Reminder
Historically, July is strong in the first half, with weakness (if it shows up) arriving mid-to-late month. So far, price has tracked that seasonal strength. Any weakness from here would align with that typical timing.

PYPL Update

PYPL Hourly, Daily, Weekly

I took a trade and it didn’t work out. I entered PYPL as a pullback setup on the Daily chart and used the breakout on the hourly to get in on Thursday. By Friday midday, my play was invalidated.

Because I trade the daily chart swings, I’ll sometimes give a trade some room intraday (or a few days) to regroup if the structure is still intact and I’m still within my risk levels. But by the time PYPL broke below the 200SMA on the hourly, the risk had already exceeded my cap, and the daily setup no longer held. I had to cut it.

PYPL Daily Chart

PYPL Chart Breakdown

Here’s what I saw in the structure:

  • The price had been rising and was then pulling back to the 10EMA. I did keep in mind that it could pull back to the 20EMA (which would not invalidate my trade).

  • Instead, price continued to decline from the initial rejection of the 200SMA on the daily.

  • On the weekly, the rejection landed PYPL back below its 50SMA, a level I generally want to see hold if I’m going to stay long.

So what’s next?

  • Price has now returned to the uptrend line from the April lows, and it’s sitting right at the 50SMA on the daily.

  • If this down move is short-term, we’ll need to see PYPL stabilize here and reclaim the 20EMA on the daily, which would also clear the 200SMA and 10EMA on the hourly.

PYPL is still in a weekly uptrend, but this was a failed breakout for my trade. If it builds here and resets, I may revisit. For now, I’m watching to see if this recent drop is just a short-term flush or the start of a deeper pullback.

Thanks for tuning in! Remember to stay patient, objective, and focused. And as always, if you enjoyed today’s read and think someone else might too, please share my newsletter with link below!