S&P 500 Technical Analysis – Awaiting the key US data for the next major move

Fundamental
Overview

The S&P 500 has been stuck
in a big range since the last FOMC decision as the market perceived it as more
hawkish than expected.

The Fed continues to place
a great deal on inflation progress to proceed with further rate cuts as
highlighted by Fed’s Waller this week. Therefore, the market is
waiting for more data to decide what the Fed is going to do next.

A soft CPI report next week
will likely trigger a strong dovish reaction in the markets, especially
considering the quick rise in Treasury yields in the last couple of months.
That should support the stock market and lead to more gains. Conversely,
another hot CPI isn’t going to help and could trigger another selloff.

Today, we have the US NFP
report and although the CPI is going to have a bigger influence on interest
rate expectations, it’s still going to be a market moving event, especially if
we get big deviations from the expected numbers.

Right now, the market would
want to see soft but not too soft data. A very bad or very hot report could add
more pressure on the market. Watch also wage growth, as Fed’s Bowman highlighted recently that it’s
still above the pace consistent with their inflation target.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 continues to range between the 5855 support
and the 6050 resistance as the market awaits the key US data. From a risk
management perspective, the buyers will have a better risk to reward setup
around the support 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 extend
the drop into the major trendline
around the 5720 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, there’s
not much else we can add here as the price action remains rangebound between the
5855 support and the 6050 resistance. It really all hinges on the upcoming US
NFP and CPI reports.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price action has been compressing as we await the US NFP release.
If the price stays above the 5960 level, that would be more bullish and will
likely take us back to the 6050 resistance. Conversely, if the price stays
below the 5920 level, the sellers will likely push the price into the support
and target a break below it. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we conclude the week with the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.