SP500 Technical Analysis – These Levels Will Be Key

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SP500 Technical Analysis.

Last week, the NFP missed expectations for a second time in a row and the previous numbers were all revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected.

Nonetheless, the unemployment rate fell once again and lessened the disappointment from the miss in the payrolls number. The worse part for the Fed is that the average hourly earnings beat
expectations, and such high wage growth is not consistent with a sustainable
return to the 2% target.

It’s worth reminding though, that the Fed will see another NFP report before the September meeting, so this NFP doesn’t change much, but the data leading into the meeting can still weigh on sentiment.

SP500 Technical Analysis – Daily Timeframe

S&P 500 Daily

On the daily chart, we can see that the S&P 500
sold off from the 4628 high and even broke below the red 21 moving average. This
turns the bias more bearish as the moving averages have also crossed to the
downside, but much will depend on what happens here at the 4494 support. In
fact, we should see the buyers stepping in here with a defined risk below the
level to target again the high and eventually the breakout. The sellers, on the
other hand, will want to see the price breaking lower to pile in even more
aggressively and extend the fall into the trendline.

SP500 Technical Analysis – 4 hour Timeframe

S&P 500 4 hour

On the 4 hour chart, we can see that the SP500 has recently broke below a key short term support around the 4560 level and
then pulled back to retest it. The sellers leant on the level as they had confluence with the
red 21 moving average and the 38.2% Fibonacci retracement level.
If the buyers manage to get a rally all the way back to the level, we should
expect the sellers to defend the level again as a break higher would open the
door for new highs.

SP500 Technical Analysis – 1 hour Timeframe

S&P 500 1 hour

On the 1 hour chart, we can see that we have a divergence with the MACD right at the 4494 support. This is generally a sign of weakening momentum often
followed by pullbacks or reversals.

Also read in our Forex News FX category.

SP500 Technical Analysis. In this case, if the price breaks above the
most recent swing level at 4518 where we have also the 38.2% Fibonacci
retracement level and the 21 moving average, the buyers will have more control
and are likely to take the price into the 4560 resistance. The sellers, on the
other hand, should pile in again at this short-term resistance to target a
break below the 4494 support. SP500 Technical Analysis.

Upcoming Events

This week the main event will be the US CPI report on Thursday. The market has been loving
the disinflationary trend seen in the past months, so an upside surprise is
likely to weigh on risk sentiment and push the market lower. On the other hand,
another miss in the data should provide some relief and lead to a rally. After
the US CPI we will also see the latest US Jobless Claims report, which is less
likely to move the market since it’s released at the same time of the CPI, but
big surprises should have an effect nonetheless.

Finally, we conclude the week with the University of Michigan Consumer Sentiment report on Friday where the market is likely to focus more on the inflation expectations figures.

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