S&P500 Technical Analysis | Forexlive
On the daily chart below, we can
see that the price has finally tested the broken trendline near the 3880 level and bounced
from there. The recent selloff came from the failure of the Silicon
Valley Bank which sent the markets into risk off as the fear
of contagion spread fast.
This weekend the Treasury and the
Fed worked on a solution to protect the depositors and calm the markets and
they came up with a new emergency
lending facility that gives the banks the possibility to convert
their long term securities at the original value instead of being marked to
market. This gave the market a boost as soon as the futures market reopened,
and we saw a rally all night long.
In the 4
hour chart below, we can see that the market is approaching a trendline that
may act as resistance coupled with the red long period moving
average. The sellers will want to defend this level and wait for the CPI report
to come out. The market is now pricing in a higher
chance of a 25 bps hike and completely priced out the 50 bps move.
This
happened because the market expects the Fed to be less aggressive in light of
the recent events. Nonetheless, a hot CPI report should raise the odds of 50
bps up again and a really hot one may even give a higher chance of the bigger
move. So, all eyes on the data tomorrow.
In the 1 hour chart below, we can
see that the sellers have the confluence of a previous swing level resistance, the 61.8% Fibonacci
retracement level and the trendline all in the same zone. This
should be hard to crack for the buyers at the first try as the sellers will
want to defend the level until the CPI.
A break above the trendline would
be a bad omen for the sellers and if the CPI report misses expectations, then
the buyers will gain full control and start a rally towards 4061 and possibly
higher.