Last Friday, the S&P 500 finished the day positive as the US PCE report came mostly in line with expectations. The market has already priced out almost all the rate cuts that were expected at the beginning of the year and it’s now expecting just one in September or December. This means that we will need more worrying data to start pricing in a rate hike and put more downward pressure on the market. For now, the dip-buyers are again in control as we continue to erase the losses from the beginning of the month.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 reached the key resistance level at 5104 where we can also find the confluence of the 50% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into a new all-time high.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we also have a downward trendline adding some extra confluence to the 5104 resistance. This should give the sellers even more conviction as they have a strong barrier where to lean on with minimal risk and big reward. The buyers, on the other hand, will need to push the price above this strong resistance to invalidate the bearish setup and open the door for a rally into a new all-time high.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action into the resistance level might have formed a bearish flag, but we will need to see the price breaking the bottom trendline to confirm it. In case of a breakout to the downside, the measured target would stand around the 4800 level.
Upcoming Events
Tomorrow, we have the US Q1 Employment Cost Index and the Consumer Confidence report. On Wednesday, we get the US ADP, the ISM Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we will see the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP and ISM Services PMI.
