Amidst recent optimism surrounding potential rate cuts by the Federal Reserve in the coming months, the S&P 500 futures (CME: ES) have been basking in positive market sentiment across recent sessions. Tuesday brought news of JOLTS Job Openings, which fell to 8.733 million from the previous 9.35 million, underscoring a potential cooling in the labour market. However, a sense of caution lingers as the anticipation of crucial data releases introduces an air of uncertainty to the equity market.
Looking ahead, the upcoming ADP Employment Change and Non-Farm Payroll (NFP) reports later in the week loom large as potential market influencers. These releases are poised to make the last few sessions of the week particularly intriguing, adding an element of excitement for those closely watching the markets.
Technical
On the 4H chart, the futures are consolidating atop the recent uptrend in a sideways manner. The 61.8% Fibonacci golden ratio provides resistance at 4,586.25, while the 25-SMA (green line) and 50-SMA (blue line) underpins the bullish momentum.
If the current resistance holds, the market could look for support at 4,580.50, the Fibonacci midpoint, ahead of the next slew of data releases. Hawkish developments in the labour market could trigger a correction of the recent rally, with support established at 4,567.25 and 4,558.75. A psychological demand zone lies not far below at 4,547.75, where buyers could be found if the trend continues.
However, if the labour market shows further signs of cooling, resistance at 4,597.25 could soon come into play. Higher resistance at 4,605.50 is established close to the dynamic resistance of the channel and could be a determining point of the directional trend as we advance.
Summary
Despite optimism rising over the Federal Reserve’s dovish tilt regarding interest rates, the market is cautiously heading into pivotal sessions that hold crucial data over the US labour market. Resistance at 4,586.25 could be an important level in the upcoming session, as it is currently resisting the continuation of the strong uptrend.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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