After a big rally after the miss in the US CPI report, the market started to run out near the key swing high level. The data still supports the soft landing story US retail sales and Unemployment claims surprised upside down last week. The market may just pull back as we approach the FOMC rate decision and there may be some profit taking or defensive positioning. However, it looks like as long as we get good economic data, the S&P 500 may continue to rise.
S&P 500 Technical Analysis – Daily Time Frame
S&P 500 daily
On the daily chart, we can see that the S&P 500 has been steadily rising since it rebounded from the red moving average of 21 and broke out of the 4494 resistance after the US CPI report was missed. The price has now started to pull back just before reaching the key 4628 high. If there is no negative news, we should see the S&P 500 recover back to the high of 4628 where we should find strong sellers waiting to position for a big drop.
S&P 500 Technical Analysis – 4 Hour Time Frame
S&P 500 4 hrs
We can see this on the 4 hour chart since we got out ascending triangle the S&P 500 soared toward a high of 4,628 with almost no decline. However, the bullish momentum has weakened as the moving averages have turned down and the price may now retrace back to the 4494 support.
S&P 500 Technical Analysis – 1 Hour Time Frame
S&P 500 1 hour
On the 1 hour chart, we can see that the ascending trend line has been broken to the downside as bearish momentum prevailed and the price is now testing the strong support level at 4560. Buyers should lean towards this level with defined risk below it to position themselves for another rally that would hopefully break above the key resistance of 4628. Sellers, on the other hand, will want to see the price break below the support to build up and extend the fall to the 4 support 494.
Upcoming events
There are many market moving events ahead this week. We’ll start today with US PMIs, where we can see the market rally if the data beats expectations, and decline if the data misses. Next, we’ll have the FOMC rate decision on Wednesday, where the Fed is expected to hike by 25 basis points, taking interest rates to 5.25-5.50%. On Thursday, it will be time for the next US Jobless Claims report, where there should be a bullish rhythm for the market, while the miss should be bearish. Finally, we end the week with US PCE and ECI reports where the market would like to see softer numbers to confirm the soft landing narrative.