S&P 500 Technical Analysis – The market eyes new highs as trade war fears abate

Fundamental
Overview

This week has been all
about tariffs. On Monday we opened with a big gap lower as Trump followed through
with his tariffs threats and imposed them on Canada, Mexico and China over the
weekend.

As it’s been the case for
previous tariffs actions though, the market started to cautiously fade the
reaction in expectation of some kind of a deal. That’s exactly what happened as
we got the news on Monday afternoon that the tariffs on Mexico were paused for
30 days after positive negotiations.

The market bounced back immediately,
and the bulls started to build their positions with more conviction. There’s
still the question with China but given that China’s response has been very soft
and we haven’t got any negative news yet, the market is keeping with the
optimism.

The focus now switched to
the US NFP report tomorrow. The labour market data throughout January has been
good, so we might see an overall good NFP report as well. The focus remains on
inflation for the Fed, so even if we get a strong NFP, it shouldn’t change the
Fed’s stance and two rate cuts by the end of the year will continue to remain
the baseline.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 has been stuck in a big range for three months now.
The market participants will continue to play the range until we get a breakout
on either side as that will likely increase the momentum and give us the next
impulse.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a smaller range between the 5960 support
and the 6150 resistance. This could be a signal that overall, the bullish view
is more probable and that the buyers remain in control. Again, there’s not much
we can say here as what we need is a breakout.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a nice support zone around the 6070 level where we can also
find the upward trendline for confluence.
If we get a pullback into the support, we can expect the buyers to step in with
a defined risk below the trendline to position for the break above the
resistance. The sellers, on the other hand, will want to see the price breaking
lower to target a deeper pullback into the 5960 support next. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures, while tomorrow
we conclude the week with the US NFP report.