S&P 500 Technical Analysis

Last Friday, the S&P 500 ended the day positive
following the US NFP report.
In fact, the data beat expectations across the board showing once again that
the labour market remains resilient without too much inflationary pressure as
wage growth continues to ease. The focus will now switch towards the US CPI
data on Wednesday as a hot report could change the Fed’s strategy in the near
term and delay the rate cuts further.

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. In this case, it led to pullbacks into the red 21 moving average and
the trendline where
the dip-buyers kept on stepping in to position for the rallies into new highs. The
recent breakout though could be a bad omen for the buyers as it opened the door
for a possible reversal, which will likely be confirmed or denied by the US CPI
report on Wednesday.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price probed below the 5180 support but
couldn’t sustain the bearish momentum as the buyers piled in more aggressively
following the goldilocks NFP report last Friday. If the price were to continue
lower and break below the support again, then we can expect the sellers to gain
control and push the price to new lows with the 5100 level as the first target.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the V-shaped recovery after the break
below the 5180 support. A break above the 5223 level should see more buyers
piling in to target new highs, while a break below the 5180 support will likely
lead to another drop into new lows.

Upcoming Events

This week is going to be a bit more tranquil on the data
front with the US CPI being the main highlight. On Wednesday, we have the US
CPI report which will likely decide if the Fed is going to delay rate cuts
further. On Thursday, we get the US PPI and the latest US Jobless Claims
figures. Finally, on Friday we conclude the week with the University of Michigan
Consumer Sentiment survey.

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