S&P 500 Technical Analysis

Last week, the S&P 500 pulled back into key
levels as the stronger than expected inflation data and the quick rise in
Treasury yields weighed on the stock market. There’s been also some
profit-taking as we approach the FOMC rate decision on Wednesday with the risk
of a hawkish surprise. Overall, the market is likely to remain supported as
long as the Fed does not restart to hike rates, or the economy does not falter.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
fell all the way back to the key trendline where we
can also find the red 21 moving average for confluence. This is
where we can expect the buyers to step in 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 increase the bearish
bets into the 4946 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we
can also find the 38.2% Fibonacci
retracement level for extra confluence around the
trendline. The price 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 where the dip-buyers kept on piling in to position for new
highs. If the price were to break below the trendline though, a reversal would
be confirmed, and we might see a bigger correction into the 4946 level.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the key support around
the 5100 level highlighted by the green box. A break below this level is likely
to trigger a big selloff into the 4946 level. If the price were to bounce from
here and break above the recent swing high at 5137, then we can expect the
buyers to increase the bullish bets into a new all-time high.

Upcoming Events

This week we have the FOMC rate decision on Wednesday
where the Fed is expected to keep rates unchanged. The market will be on the
lookout for hawkish surprises though following the stronger than expected
inflation data. On Thursday, we conclude with the latest US PMIs and Jobless
Claims figures.

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