S&P 500 Technical Analysis | Forexlive

The S&P 500 couldn’t increase the gains much this
week despite a less hawkish Fedspeak and increased rate cuts expectations. One
good reason might be the weakening of US data, especially on the labour market
side, as we have also seen recently in the details of the US Consumer Confidence report.
Historically, the sustained rise in the unemployment rate is bearish for the
stock market.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
began to lose some steam as it approached the cycle high at 4607. We might
start to see some profit taking at these levels after such an incredible rally
which should finally offer a decent pullback for the buyers to load up on longs
again at better prices. The sellers, on the other hand, are likely to step in
around these levels with a defined risk above the cycle high to position for a
drop into new lows.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that
the price has been diverging with
the MACDas it was
approaching the cycle high. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. This might be a signal that we might
indeed see a deeper pullback soon. From a risk management perspective, the
buyers will have a much better risk to reward setup around the previous resistance turned
support at 4400 level where we can also find the 38.2% Fibonacci
retracement level for confluence.

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. The price
recently broke the rising channel to the downside, which is another bearish
signal. The first target for the sellers should be the base of the channel
around the 4485 level and upon a further break lower, the support at 4400. The
buyers, on the other hand, will lean on those levels to position for further
upside targeting a break above the cycle high.

Upcoming Events

Today we will get the US PCE and US Jobless Claims
data with the market likely focusing more on the Jobless Claims figures given
that we already saw the latest inflation data with the US CPI report just two
weeks ago. Tomorrow, we conclude the week with the US ISM Manufacturing PMI
which missed expectations by a big margin the last time.