Fundamental Overview
This week has been pretty boring all around as the lack of catalysts kept the price action confined in a tight range. The market is waiting for the key economic releases next week as we will get the ISM PMIs and lots of US labour market data including the NFP report.
As a reminder, the Fed is now very focused on the labour market as Fed Chair Powell said that they will not welcome any more weakness and will do everything they can to keep it strong. Therefore, the data will decide whether the central bank will go with a standard 25 bps cut in September or take a more aggressive approach with a 50 bps cut.
In today’s context though, weaker labour market data and the prospect of a 50 bps cut might not be enough to lift the stock market and could actually lead to more downside on recessionary fears, so that’s something to keep in mind.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 briefly broke below the 5600 level but eventually rallied back above it. That’s been a key level as the market got stuck in a consolidation awaiting the key economic releases next week. It should act as kind of a barometer for the sentiment with the price staying above it being more bullish and staying below it being more bearish.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we got a perfect bounce on the key trendline around the 5560 level tonight as the dip-buyers piled in with a defined risk below it. The sellers will want to see the price breaking below the trendline to gain some control and position for a drop into the 5350 level next.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the rangebound price action that’s been going on since last week. We have a strong resistance now around the 5660 level where the price got rejected from several times.
A break above that resistance should see the buyers increasing their bullish bets into a new all-time high. The sellers, on the other hand, will likely step in around the resistance with a defined risk above it to position for a break below the trendline and new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US PCE report.
