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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Today we will get some key economic data as we will see the latest US Jobless Claims figures and the US PMIs.
