Yesterday, the Fed hiked the interest rates by 25 bps as widely expected and left the policy statement basically unchanged. The market was more focused on the Fed Chair Powell’s press conference for signals on the future moves. Unfortunately, Powell didn’t offer anything for the market as he kept all the options on the table and just repeated their data dependency when it comes to their policy decisions.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that since the bounce on the red 21 moving average and the breakout of the resistance following the miss in the US CPI, the S&P 500 kept on rallying towards the 4628 high with very shallow pullbacks. We are getting close to a very strong level though where we can expect the sellers to step in aggressively with a defined risk above the level to target a bigger pullback into the trendline.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the S&P 500 recently pulled back into the previous swing high support where the buyers stepped in with a defined risk below the level to position for another rally into the 4628 high. We can also notice that the price is starting to diverge with the MACD right when it’s getting closer to the resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action is forming an ascending triangle pattern with the resistance standing at the previous high at 4609. The buyers will need to break this level to extend towards the 4628 high where the real battle with the sellers is likely to start. The sellers, at the moment, can either wait for the price to come into the 4628 high to position for a big downside move or wait for the price to fall below the trendline to pile in and target a selloff into the next major trendline.
Upcoming Events
Today we will see the latest US Jobless Claims. The market is more likely to move on big deviations from the expected numbers, so data more or less in line with expectations is unlikely to cause notable reactions. Anyway, if the data is much better than expected, we will likely see the S&P 500 rallying. On the other hand, if the data is much worse than expected, we are likely to see a selloff in the index as the recessionary fears will prevail. Tomorrow, we’ll get the latest US PCE and ECI reports with the market likely to focus more on the wages data given the strength in the labour market.
See also the video below: