Last week, the S&P 500 came under pressure due to geopolitical fears and a general sense of risk aversion. The latest developments have seen Israel retaliate against Iran, but the latter has played down the airstrikes. This episode could be behind our backs, although it would be worth monitoring if it were to become worrying again. On the macro front, the Fed’s rhetoric has become more hawkish, particularly in the latter part of the week, as inflation growth appears to have stalled. Overall, last week saw many bearish catalysts weighing on the market. So we will likely need some positive data on the inflation front this week to reverse the trend.
S&P 500 Technical Analysis – Daily Timeline
S&P 500 daily
On the daily chart we can see that the S&P 500 continues to reverse with a clear bearish trend now as the price continues to print lower lows and lower highs with the moving averages being breached lower. Price has now reached another key support level at 4946. This is where we can expect buyers to step in with a set risk below the level to position themselves for a rally towards the new highers. Tops. Sellers, on the other hand, will want to see the price fall to increase bearish bets until the next support at 4846.
S&P 500 Technical Analysis – 4 hour time frame
S&P 500 4 hours
On the 4 hour chart we can see that from a risk management perspective sellers will have a much better risk of rewarding the setup around the previous support turned resistance at 5057 where they will also find the confluence of the moving average red 21 and the 38.2% Fibonacci retracement level. Buyers, on the other hand, will want to see price break above resistance to invalidate the bearish setup and position for a rally to a new all-time high.
S&P 500 Technical Analysis – 1 Hour Time Frame
S&P 500 1 hour
On the hourly chart we can see that we have a minor black trendline defining the current bearish momentum, with the red 21 moving average acting as dynamic resistance. This is where we can expect sellers to step in again if we get a pullback into the trendline to position ourselves for a break below support at 4946. Buyers, on the other hand, will want to see the price move higher to accumulate and target a rally towards resistance at 5057.
Events to come
This week is a bit empty on the data front with only a few notable releases. We start tomorrow with the US PMIs. On Thursday we will receive first quarter US GDP and the latest US jobless claims figures. On Friday, we conclude the week with the US PCE report.
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