S&P 500 Technical Analysis | Forexlive

The NFP report last
Friday beat expectations once again on the headline number raising the record
streak to 14. The details of the report weren’t that great though. The
unemployment rate jumped from 3.4% to 3.7%, which makes it the biggest M/M
increase since the pandemic. The average workweek hours worked ticked lower
(employers generally lower the hours before laying off people).

All in
all, there was something for everyone there. The optimists saw a solid jobs
growth and the higher unemployment rate and soft average hourly earnings as
less labour market tightness that should reduce inflationary pressures. The
lower average weekly hours worked may be seen as just a return to pre-pandemic
trend.

The
pessimists, on the other hand, focused more on the details rather than the
headline number as generally it’s not the absolute number that matters but the
trend.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, the S&P 500 made a new high
following the NFP report beat and extended the overall rally to the 4298.50, a
few ticks shy of the 4300 level. We can see that there’s a key swing level at
the 4324.25 level and a clear break of that resistance would
open the door for the 4600 level next. We should find strong sellers at that
4324.25 resistance if the price gets there. For the buyers there’s no good
entry point at the moment. They should wait for the 4324.25 breakout or a
pullback before considering new longs.

S&P 500 Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, there’s a good support zone at
the 4240 level where we can find the previous higher low, the red 21 moving average and the
38.2% and 50% Fibonacci retracement levels. From
a risk reward perspective, that support area would be a good spot where the
buyers can lean on with a defined risk just below it. The sellers, on the other
hand, are likely to pile in more aggressively in case the S&P 500 breaks
below the upward trendline.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, the S&P 500 may
even bounce on the red 21 moving average and continue higher if the bullish
momentum from the last Friday’s rally remains strong. In that scenario though,
we are likely to see a divergence and
the selloff from the 4324.25 resistance should become even more likely.

The risk event to watch today is the
US ISM Services PMI report.

• Given that the S&P Global Services PMI
  beat expectations the last month, we might expect a good reading for the ISM
  report. In case the data beats expectations and the prices paid sub-index comes
  out lower, the S&P 500 may rally on the soft landing expectations.
• Conversely, if the data misses
  expectations, we might see some weakness in the market, which may offer the
  above mentioned pullback or even a complete reversal.