Fed Members Warn Rate Hikes: S&P 500 Technical Analysis and Outlook
Last week we heard from many Fed members as the blackout period ended after the FOMC meeting. The general sentiment is the same: wait for the data to decide how much more they should tighten. In fact, although the majority expects two more rate hikes this year, they keep repeating that they are conditional to the data.
The data we saw last week would make them lean more towards a hike as the housing market data surprised to the upside, the US Jobless Claims were still solid, and the US Services PMI beat expectations. Everything will of course depend on the next NFP and CPI reports, but if keep seeing good data, the Fed should raise rates in July as the market currently expects.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that after reaching the 4494 high, the S&P 500 started a slow and steady retracement. The 4324 support looks to be the best spot where the buyers should pile in as we can also find the red 21 moving average there. On a break lower, the buyers may wait for the price to come into the trendline, while the sellers should enter the market at every breakout.
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 near the 4324 support for further confluence. The moving averages are crossed to the downside defining the current downtrend. The sellers are likely to lean on the moving averages and keep targeting the break lower. A moving average crossover to the upside should signal a change in trend and the buyers may start to pile in expecting new highs.
S&P 500 Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that at the moment the price is finding some support at a previous swing low level at 4383. A break to the downside should see more sellers piling in and targeting the 4324 support. In case the price bounces strongly here, the buyers may want to wait for the price to first make a new higher high breaking above the 4427 level before jumping on board.
This week is even emptier than the last one on the data front with just the US Jobless Claims and the US PCE scheduled for the end of the week. Nonetheless, we will hear again from many Fed members, but given that we haven’t got any important economic indicator yet, it’s unlikely to see them signalling the next move.
