S&P 500 Technical Analysis | Forexlive

Last Friday, the S&P 500 rallied despite the ISM Manufacturing PMI missing
expectations and falling further into contraction. The market is still trading
based on rate cuts expectations as the trigger for the rally was a neutral Fed Chair Powell speech
where he didn’t push back against the market’s pricing. The market seems to be
all-in on the soft-landing trade and ignoring the weakening economic data,
especially on the labour market side. The sentiment is also getting a bit bubbly
right when things might really go south, so the buyers might want to be extra
cautious going forward.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
managed to extend to a new high last Friday reaching the cycle high. From a
risk management perspective, this is a really bad spot for the buyers to
increase their bullish bets, especially after such a strong rally. The sellers,
on the other hand, will likely keep on piling in around these levels with a
defined risk above the cycle high to target a drop into the 4400 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that
the price has been diverging with
the MACDinto the cycle
high. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. This should be another signal for the buyers to be
extra cautious around these levels, while the sellers are likely to take it as
a confirmation that we could see at least a decent pullback.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the divergence with the MACD, which has been going on since the
breakout of the key resistance at
4400. The price bounced on the swing low last week before extending to the
cycle high, so the sellers will need the price to break below that level to
increase their bearish bets into the 4490 level and upon a further break,
extend the target to the 4400 level. The buyers, on the other hand, are likely
to lean on those levels to position for a new rally.

Upcoming Events

This week we will see lots of US labour
market data culminating with the NFP release on Friday. Tomorrow, we have the
ISM Services PMI and the US Job Openings reports. On Wednesday, we will get the
US ADP data. On Thursday, it will be the time for the US Jobless Claims
figures, while on Friday we conclude the week with the NFP report.

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