The S&P 500 managed to hold into the last week gains and consolidated near a key resistance as the first part of the week didn’t offer any meaningful catalysts. The things should change today though as we will see the latest US Jobless Claims data and given the recent weakness in the labour market data, the market is likely to react strongly to this report.
S&P 500 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the S&P 500 last week managed to pull off an incredible rally even in the face of weakening labour market data. The market might have interpreted such data as a good thing for inflation and the soft-landing scenario, but what matters is generally the trend and that shouldn’t be bullish.
For the sellers the S&P 500 is now at great levels to position for another selloff into new lows as we have the previous swing high, the trendline and 61.8% Fibonacci retracement level for confluence. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and target the highs.
S&P 500 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the resistance zone around the 4390 level highlighted by the blue box. This is a crucial spot for market participants ahead of today’s data release. A selloff should confirm the bearish setup and give the sellers even more conviction to target new lows. The buyers, on the other hand, will have much work to do to break higher after such a strong rally.
S&P 500 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now starting to diverge with the MACD right at the key resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. A break below the trendline should give the sellers further confirmation for a bearish move. The sellers should also watch out for a spike higher followed by a quick reversal as it can happen sometimes around such key resistances.
Upcoming Events
Today we have the US Jobless Claims on the agenda, while tomorrow it will be the time for the University of Michigan Consumer Sentiment report. The market is likely to focus on the US Jobless Claims given the recent weakness in the labour market data. Weak figures are likely to weigh on sentiment and push the S&P 500 lower, while good readings might be enough for the market to rally.
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