The S&P 500 continues its retreat as the market is awaiting the US CPI data on Wednesday to decide on the next move. The NFP report on Friday showed that the labour market is still solid despite the slight miss on the headline number, and the worse part for the Fed is that the Average Hourly Earnings ticked up a little. There was nothing in the report to suggest that the Fed shouldn’t hike at the July meeting and in fact the market pricing for the upcoming FOMC rate decision remained basically unchanged. For now, the technicals will lead the price action trading into the CPI report, but ultimately it will come down to the data to decide where the market is going to go.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 couldn’t break above the previous 4494 high and got rejected. The price pulled back into the red 21 moving average where we may start to see the buyers stepping in leaning on the moving average to target again the breakout and the 4628 level. If the price breaks below the moving average, we might get a deeper pullback into the 4324 support, where the buyers will have also the trendline and the 38.2% Fibonacci retracement level for further confluence. That would be a better level where to buy from.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that recently the price fell from the 4494 high and made the moving average to cross to the downside as the bearish momentum prevailed. We got then a brief rally out of the NFP report, but the sellers leant on the red 21 moving average to position for more downside and target the 4324 support. If the price breaks above the recent swing high at 4475 though, then the buyers will be again in control and start targeting the 4628 level.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the brief rally the last Friday got rejected also from a previous swing low level and eventually the price bounced near the most recent low. These two levels should define the sentiment going forward. If we see a break to the upside, then the buyers will be in control and most likely lead to a breakout. On the other hand, if the price breaks below the low, we should see the fall extend to the 4324 support.
Upcoming Events
This week the market will be focused on the US CPI report on Wednesday, but there are also other important economic data such as the US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment on Friday. A miss in the CPI data, especially on the core numbers, should lead to a rally in the stock market, while a beat is likely to weigh on risk sentiment and take the market down.
