S&P 500 Technical Analysis

Yesterday, the Fed left interest rates unchanged as
expected with basically no change to the statement. The market was fearing some
hawkish stuff, but we didn’t get any. In fact, the Dot Plot showed still three
rate cuts for this year and the economic projections were all upgraded with
growth and inflation higher and the unemployment rate lower. Moreover, during
the press conference, Fed Chair Powell didn’t
sound hawkish, on the contrary, he was fairly neutral. This gave the S&P
500 the green light for a rally as the risk sentiment turned very bullish.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
bounced on the key trendline and
extended the rally into a new all-time high following the Fed decision. The
buyers piled in aggressively as the fear of a hawkish decision was replaced by
greed and a strong bullish sentiment. This is definitely not a market for the
sellers, so they will need to wait for a change in sentiment and some key
breakouts before considering new shorts.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more
clearly the bounce on the trendline and the rally yesterday following the FOMC
decision. We can notice that 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 and
the trendline 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 that’s when we will likely see a bigger correction to the
downside.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, the buyers will have a much better risk to
reward setup around the previous resistance now
turned support at 5188 where there’s also the confluence of the
trendline and the red 21 moving average. The sellers, on the other hand, will
likely pile in on a break below the trendline to position for a break below the
major trendline with a better risk to reward setup.

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see the latest US Jobless Claims figures and the US PMIs.

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