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S&P 500 Technical Update Heading into ECB

S&P 500 Technical Update Heading into ECB

What’s inside:

  • Market moving events on deck; ECB and NFP
  • Expect the unexpected, stick to your game-plan
  • Technical support and resistance levels in focus from 2072 up to 2137

Even if you view the market from a technical lens such as myself, it is still important to know what major fundamental events could potentially impact your trading plan/current positions. We have two significant events in the next 24+ hours. If you have no plan heading into a major event, then it is best to sit on the sidelines until the dust settles. If you have a plan, then just be prepared for outsized moves and keep risk wrangled in.

First up, the ECB monetary policy decision in just a bit at 11:45 GMT time, and with no move expected from the central bank, the press conference with Mario Draghi at 12:30 will likely be where we will see volatility spawn from. As stated in the DAX article earlier this morning, “expect the unexpected”. While the impact of Draghi’s words (or policy changes) will be most felt in European related markets, reverberations will certainly be felt across all risk assets.

Tomorrow, at 12:30 the U.S. is set to release the jobs report for May. Analyst are looking for non-farm payrolls to show 161k new jobs added in May, with a tick lower in the unemployment rate to 4.9% from 5% prior. Average hourly earnings will also be important for signs of wage inflation; AHE was 2.5% YoY in April.

Yesterday, we discussed the importance of the 2085 level in the S&P 500 as short-term support. In the early cash session, we saw this level tested and hold almost to the tick (low was 2084.84) before popping higher and closing out the day on a relatively strong note; better than expected ISM Manufacturing data helped provide the early-day spark.

Short-term levels to watch: (Subject to change after today heading into NFP) The overnight low is 2093, but the most important short-term support level is 2085. Trend-line support cuts between the two levels at around 2091. Below this range of support we will need to shift our focus to 2072. On the upside, resistance comes in by way of 2100, then moving past the Monday low volume holiday session (2105), our next level of resistance comes in at 2111 (4/20 peak) and then 2116 (11/2015 peak). Beyond 2116 there is resistance from last year starting in the 2120s up to the 2137 record high.

SPX500 Hourly

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.