Last week the Fed kept interest rates unchanged as
expected while striking a hawkish tone via the Dot Plot. In fact, the Fed not
only sees another rate hike by the end of the year, but also much less rate
cuts by the end of 2024. Fed Chair Powell has also
admitted that the soft-landing scenario is not his base case at the moment and
stronger than expected economic data may require additional tightening. For
now, the economic data remains strong with Jobless Claims crushing
expectations last week, which is not what the Fed wants to see.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that the S&P 500
sold off following the FOMC meeting and it’s now testing the key support around
the 4328 level. This is where we can expect the buyers to step in with a
defined risk below the support to target a rally into the highs. We can also
see that the price is a bit overstretched as depicted by the distance from the
blue 8 moving average. In such
instances, the price generally pulls back to the moving average or consolidates
before another impulse.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see more closely the
key support around the 4328 level and that a break below it would open the door
for a fall into the major trendline and the
4194 support. In case of a break lower we can expect even more sellers coming
into the market while the buyers will wait around the trendline to buy the dip.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see that in
case of a bounce on the support, the sellers will have two possible areas where
to sell from. The first is around the 4365 level where we can find the confluence with a
previous swing level, the 38.2% Fibonacci
retracement level and the red 21 moving average. The
second one is around the downward trendline where there will be the confluence
with the daily blue 8 moving average and the 50% or 61.8% Fibonacci retracement
level. The buyers, on the other hand, will want to see the price breaking above
the trendline to invalidate the bearish setup and position for another rally.
Upcoming Events
This week is pretty bare on the data front with just a
couple of notable economic releases. Tomorrow, we will get the latest US
Consumer Confidence report while on Thursday we will see again the US Jobless
Claims data. On Friday, we conclude the week with the US PCE data.