Yesterday,
the Fed hiked the interest rates by
25 bps as widely expected and left the policy statement basically unchanged.
The market was more focused on the Fed Chair Powell’s press conference for
signals on the future moves. Unfortunately, Powell didn’t offer anything for
the market as he kept all the options on the table and just repeated their data
dependency when it comes to their policy decisions.
S&P 500 Technical
Analysis – Daily Timeframe
S&P 500 Daily
On the daily chart, we can see that since the
bounce on the red 21 moving average and the
breakout of the resistance
following the miss in the US CPI, the S&P 500 kept on rallying towards the
4628 high with very shallow pullbacks. We are getting close to a very strong
level though where we can expect the sellers to step in aggressively with a
defined risk above the level to target a bigger pullback into the trendline.
S&P 500 Technical
Analysis – 4 hour Timeframe
S&P 500 4 hour
On the 4 hour chart, we can see that the S&P
500 recently pulled back into the previous swing high support where the buyers
stepped in with a defined risk below the level to position for another rally
into the 4628 high. We can also notice that the price is starting to diverge with the
MACD right
when it’s getting closer to the resistance. This is generally a sign of
weakening momentum often followed by pullbacks or reversals.
S&P 500 Technical
Analysis – 1 hour Timeframe
S&P 500 1 hour
On the 1 hour chart, we can see that the
price action is forming an ascending triangle
pattern with the resistance standing at the previous high at 4609. The buyers
will need to break this level to extend towards the 4628 high where the real
battle with the sellers is likely to start. The sellers, at the moment, can
either wait for the price to come into the 4628 high to position for a big downside
move or wait for the price to fall below the trendline to pile in and target a
selloff into the next major trendline.
Upcoming Events
Today we will see the
latest US Jobless Claims. The market is more likely to move on big deviations
from the expected numbers, so data more or less in line with expectations is
unlikely to cause notable reactions. Anyway, if the data is much better than
expected, we will likely see the S&P 500 rallying. On the other hand, if
the data is much worse than expected, we are likely to see a selloff in the
index as the recessionary fears will prevail. Tomorrow, we’ll get the latest US
PCE and ECI reports with the market likely to focus more on the wages data
given the strength in the labour market.
See also the video below: