S&P 500 Technical Analysis | Forexlive

The S&P 500 yesterday fell hard into the close
with no clear catalyst. It might have been just profit taking as the market was
anyway getting more and more overstretched. The only notable economic release
was the US Consumer Confidence report
where the data beat across the board. We are now close to the Christmas
holidays and liquidity is likely to get thinner which increases the risk of
bigger swings. Today the market will focus on the US
Jobless Claims figures as the labour market continues to be a key spot to watch
for the soft-landing narrative.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
yesterday dropped hard into the close as some profit taking might be unfolding.
The index was overstretched anyway, and a pullback was bound to happen at some
point. From a risk management perspective, the buyers would have a much better
risk to reward setup if they leant on the 4606 level where there’s also the red
21 moving average for confluence.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we
have a good support zone around the trendline where we
can find the confluence with the 50% Fibonacci
retracement level and the red 21 moving average. The
sellers, on the other hand, will want to see the price breaking below the
trendline to pile in and position for a drop into the most recent swing low at
the 4540.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg higher diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we are still in the pullback territory, but if the
price were to break below the trendline, a reversal would be confirmed, and the
sellers will likely increase the bearish bets into the 4540 level.