Technical View for the S&P 500 on FOMC

Technical View for the S&P 500 on FOMC

Technical View for the S&P 500 on FOMC
Technical View for the S&P 500 on FOMC Getty Images

Today at 2:00 p.m. EST, the FOMC statement will be released, to be followed a half hour later by the press conference, which often leads to a volatile trade.

We will look at some technical ideas for trading the S&P 500 futures while looking at the hourly bar chart below, which goes back to the beginning of last week.

It’s no secret that we have a bullish view, as buying dips remains the path of less resistance and has been much less painful than selling rallies. However, we realize that at some point this market will go down; and going into the end of the month, we see equities vulnerable for at least a short-term sell-off.  Today, the FOMC statement release, combined with the fact that the S&P 500 could be perceived as top-heavy, may lead to some weakness as well.

However, we still like the idea of buying the dips in this market intra-day as long as price is above 2448 – 2450 (the bottom edge of the chart). The first downside area in which we would look to find support is the yellow shaded range between 2470 -2472.  We would give this a single star rating because we think the support this area offers is minor.

Technical View for the S&P 500 on FOMC

Below that, the 2460.25 to 2463.75 region, shaded in orange, would be given a two-star rating; we have a stronger conviction that there will be support here on first touch.

Toward the bottom of the chart, the grey shaded area marks what we would consider a three-star support rating; and if price trades there today, we believe that this area is a fair “line in the sand” for bulls to hold or lose their bias.

To the upside, our levels are more targets than areas of resistance.  If we anticipate a resistance level and attempt to short, we will be doing so with smaller size. Our weekly target is at the 2383.00 area, which is the 23.6% extension of last week’s range, followed by the 38.2% extension at 2387.25, which is about ten handles or points above last week;s high, and finally the 50% extension at the 2390.50 area. We do think that there will be strong resistance somewhere between the 2387.25 and 2390.50 levels.

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