Yesterday, the US CPI report missed expectations across the board with unrounded figures looking even better. This led the market to expect just one final hike at the July FOMC meeting as the labour market remains tight and the Fed members didn’t hint to another skip after the CPI release. Overall, the chances of getting a soft landing increased but now will come the part when the market will have to be careful and watch out for signs of too much slowing in economic growth.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the red 21 moving average acted as dynamic support for the S&P 500 as the buyers leant on the moving average to position for a breakout. The target now should be the 4628 level and after that, the all-time high. If this breakout fails and the price falls quickly back below the 4494 level, it would be an ominous signal for a fakeout, but at the moment it looks like only ugly economic data can cause such an event.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the 4494 resistance coupled with the trendline drawn on the higher lows, formed an ascending triangle. A breakout on either side generally leads to big moves afterwards as the momentum increases and more buyers or sellers pile in. All else being equal, we should see the S&P 500 rallying into the 4628 level in the next days and weeks.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we may have a mini ascending triangle with the resistance standing at 4524. A break above that level should see more buyers piling in and extend the rally towards the 4628 level. Alternatively, if we get a pullback, we should see the buyers leaning on the 4494 level where we have also a trendline for confluence. The sellers, on the other hand, will want to see the price breaking below the 4494 level and the trendline to confirm the fakeout and pile in to extend the selloff into the black trendline at 4440.
Upcoming Events
Today we have the US Jobless Claims on the calendar and it’s likely that we will see a pullback in case we see a big miss to the expectations and a rally in case the data beats. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.
See also the video below:
