S&P 500 Technical Analysis | Forexlive

The
recent beat in the NFP data
accompanied by weakening details like the higher unemployment rate and lower
average weekly hours, hasn’t weighed too much on the S&P 500 as it saw a
resilient but less tight labour market, which may eventually lead to lower
inflation without too much pain in the economy.

The miss
in the ISM Services PMI hasn’t
impacted the market either, on the contrary, the lower prices paid sub-index
may have caused even more speculation that core inflation could fall without
too much damage.

The big
miss in Jobless Claims was
taken with a pinch of salt due to seasonal adjustments and the Continuing
Claims showing more improvement. Overall, the market focused more on the good
side of the data rather than the bad one.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
managed to probe above the key 4324 swing high level from August 2022, although
it’s curious that it did so without any clear fundamental catalyst. There may
be some FOMO kicking in at these levels. If the S&P 500 keeps trending
upwards, there’s no real resistance until
the 4500 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence between
the new high and the MACD. This
may be significant, especially near this key level. Generally, a divergence
signals a pullback or a reversal. In this case, the first option is the
pullback with the price likely to fall towards the upward trendline where we
can find confluence with the
61.8% Fibonacci retracement level, a
previous swing high resistance turned support and the
red 21 moving average.

We should see the buyers leaning on this support
zone with a defined risk just below it to target another higher high. The
sellers, on the other hand, will want to wait for the price to break through
the trendline before piling in and extend an eventual selloff towards the 4175
level.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the short-term price action with the S&P 500 consolidating a bit
near the highs. From a risk management perspective, the buyers may be better
off waiting for the pullback as the price looks overstretched here. The
sellers, on the other hand, should wait for the break of the trendline given
that they don’t have much to lean on to at the current levels.

This week there
are many important events for the S&P 500 beginning with the US CPI report
tomorrow, that is likely to seal the expectations for the FOMC rate decision
the following day, and later in the week another Jobless Claims report and the
University of Michigan consumer sentiment survey, which has impacted the market
a lot last time with the big jump in long term inflation expectations.