The S&P 500’s relief rally encountered resistance yesterday, leading to a negative close. The first part of the week has been characterized by a lack of economic data and Fedspeak due to the blackout period. This contributed to the rally, which was further fueled by weaker-than-expected inflation data. However, there were concerns raised about the labor market.
Beginning today, a series of top-tier economic data releases will take center stage. These include the US Q1 GDP and the latest US Jobless Claims figures. The week will conclude with the release of the US PCE report on Friday.
On the daily chart, the S&P 500 is trading near a key resistance level at 5104. This level also coincides with the 50% Fibonacci retracement level and the 21-day moving average. Sellers are likely to step in at this point, targeting a drop into new lows. Buyers, on the other hand, will aim for a break above this resistance to invalidate the bearish setup and position for a rally to new all-time highs.
The 4-hour chart shows that the relief rally faced resistance around the 38.2% Fibonacci retracement level, which also aligns with the 21-day moving average. These levels provide entry points for sellers, as a break above them could trigger a stronger rally and invalidate the bearish setup.
Zooming in to the 1-hour chart, a minor support zone is evident around the 5042 level, where the 21-day moving average also provides confluence. Buyers may look to enter long positions at this level, targeting new highs. Sellers, however, will want to see a break below this support to confirm a reversal and increase their bearish bets.
