The S&P500 Futures (CME: ES) staged a rebound this week, showcasing resilience after a 1.77% dip halted a nine-week winning streak last week.
Currently trading 1.43% higher, the index futures strive for a positive weekly close. However, a dip on Thursday, triggered by a hotter-than-expected US inflation reading for December, injected uncertainty.
Inflation surged to 3.4%, surpassing market expectations and complicating the anticipated rate cuts. The Federal Reserve’s 2% target now faces challenges as inflation runs hotter, prompting questions about the initially anticipated March rate cuts. Cleveland Fed President Loretta Mester’s caution further adds uncertainty. As markets weigh these dynamics, the looming question is whether the S&P500 Futures gains will endure into the coming weeks.
Technical
The S&P500 Futures recently faced a challenging downtrend after breaking down below an ascending channel pattern and breaching the crucial 100-day moving average on the 4H chart, signalling a bearish trajectory.
However, a notable shift in sentiment materialized as the futures edged past the 100-day moving average during Monday’s rally, commencing from the 4702.00 level amid oversold RSI conditions. The subsequent bullish surge formed a fresh support level, propelling the index futures beyond the 61.80% Fibonacci Retracement Golden Ratio.
Despite an attempt to retest the 4841.50 resistance level, a reversal unfolded amid overbought RSI conditions. The delicate balance between bullish and bearish pressures now hinges on the sustainability of the downside momentum, potentially finding support at the 50% level, while the 4841.50 resistance level remains a focal point if upside momentum prevails.
Summary
The S&P500 Futures exhibit resilience, rebounding from a brief setback to maintain a positive trajectory. As technical indicators signal a delicate balance between bullish and bearish pressures, the coming weeks unfold with uncertainties surrounding the Federal Reserve’s response to steeper inflation and the sustainability of gains in a dynamically evolving market.
Sources: U.S. Bureau of Labor Statistics, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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