S&P 500 Technical Analysis

Last Friday, the S&P 500 sold off into the
close as we got risk off flows across the board due to news of imminent Iranian
retaliation. Over the weekend, Iran launched its operation with drones and
missiles against Israel but almost all of them were intercepted and there were
no casualties. In the end, Iran said that the operation was deemed concluded
and we got reports of general de-escalation with the US telling Israel that it
won’t support a retaliation. We might see some positive risk sentiment and
probably gap up with the economic data being in focus next.

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. The break of the trendline and
the 21 moving average could
be a bad omen for the buyers as it opened the door for a bigger correction into
the 4713 level. The price fell into the first key support level
at 5104 last Friday following some risk off flows into the weekend. This is
where we can expect the buyers to step in 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 target the next support at 5057.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
recent price action might have formed what looks like a bullish flag,
although the price will need to break out to the upside to confirm it. We can
also see that from a risk management perspective, the sellers will have a much
better risk to reward setup around the upper bound of the flag where they will
also find the confluence of the
previous strong resistance zone and the red 21 moving average. The buyers, on
the other hand, will want to see the price breaking higher to invalidate the
bearish setup and increase the bullish bets into a new all-time high.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that
besides the resistance and the moving average, the sellers will also find the
61.8% Fibonacci
retracement level adding some extra confluence around
the 5180 level. Given the news of de-escalation, we might indeed get some risk
on flows today and push towards those levels.

Upcoming Events

This week is a bit empty on the data front with just two
notable reports. Today we have the Retail Sales data while on Thursday we get
the latest US Jobless Claims figures.

This article was written by FL Contributors at www.forexlive.com.