S&P 500 Technical Analysis – We are at a key support | Forexlive

Last Friday, the market sold off as the University of Michigan Consumer
Sentiment report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.

The actual events fell short of expectations as we haven’t
got a ground operation and, although we got mixed signals, it seems like Iran is not intentioned to join
this war “provided that Israel does not dare to attack Iran”. This could lead to
a relief rally and the technical levels can help in identifying the likely
entry and exit points.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
fell back to the broken resistance now turned support around
the 4331 level where we can also find the 38.2% Fibonacci retracement level
for confluence. This is
where we can expect the buyers to step in with a defined risk below the support
to target the trendline around
the 4050 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that besides the support and the
38.2% Fibonacci retracement level, we have also the red 21 moving average for
confluence. This makes this zone a good entry point for the buyers but could
give also the sellers more conviction to position for a bigger drop if the
price continues lower invalidating the bullish setup.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the support zone around the 4331 level where the buyers are likely to
pile in with a defined risk below the level. A break above the recent high
around the 4383 level is likely to increase the bullish momentum into the major
trendline where the sellers will step in with an even better risk to reward
setup and target another big selloff into the lows.

Upcoming Events

This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.