S&P 500 Technical Analysis | Forexlive

Last Friday, the S&P 500 extended the pullback
from the highs reached after a strong rally triggered by the FOMC decision. This
might have been just a profit-taking move from overstretched levels as nothing
has changed in the data as we got strong US Jobless Claims figures
and good US PMIs. Looking
ahead, we are approaching a new month where we get the key economic data
including the US CPI. The path of least resistance though remains to the upside
until the labour market cracks or the reacceleration in inflation gets
confirmed and we get some hawkish repricing in interest rates expectations.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
has
been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, it led to pullbacks into the red 21 moving average and
the trendline where
the dip-buyers on stepping in to position for the rallies into new highs. The
price got a bit overstretched after the FOMC rally as depicted by the distance
from the blue 8 moving average. In such instances, we can generally see a
pullback into the moving average or some consolidation before the next move.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that from
a risk management perspective, the buyers will have a much better risk to
reward setup around the trendline where we can also 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 lower to
invalidate the bullish setup and position for a bigger correction to the
downside.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price is at a minor support zone
where we have a minor trendline with the confluence of the 38.2% Fibonacci
retracement level and the red 21 moving average. The buyers are likely to step
in here with a defined risk below the trendline to position for a rally into a
new all-time high. The sellers, on the other hand, will want to see the price
breaking lower to position for a break below the major trendline with a better
risk to reward setup.

Upcoming Events

This week is going to be shortened by the US Holiday on
Friday. Tomorrow, we have the US Durable Goods and Consumer Confidence reports.
On Wednesday we have Fed’s Waller speaking. On Thursday, we get the latest US
Jobless Claims figures, while on Friday we conclude with the US PCE report and
Fed Chair Powell.