SPDR S&P 500 (SPY)

[USDollar]

Yes, that's the correct thinking overall.

Re violations, the amount of violations is rather critical for veracity.
Also what is doing after the viol.
In this case price found support at a round number - 150 (for now)
the small flag after bounce from 150 establishes the support as true, but price CAN retest that support. I wouldn't buy it, maybe just a small position.
The slow sell towards 155 says 155 is support regardless of being violated now - so this viol thing is suspicious of shakeout.