Daily Price Outlook
The global markets sentiment prologned its upward trend and remained well positive on Friday as traders are confident that interest rates won't go up due to lower inflation signs. Thereby, the S&P500 Futures, which predict how well the US stock market will do, have gone up by about 0.20% to around 4,490.
This situation arises from the relatively underwhelming recent inflation data in the United States. As a result, the Federal Reserve, responsible for decisions regarding the country's monetary policy, appears to be adopting a more relaxed stance concerning price fluctuations. Meanwhile, Philip Lowe, who leads Australia's central bank, supports thier choice to maintain a stable monetary policy stance to avoid job losses. Thus, the markets are positive as traders feel better about rates and prices.
In addition, recent polls by Reuters show that both the Reserve Bank of New Zealand (RBNZ) and the European Central Bank (ECB) are likely to keep interest rates unchanged in their upcoming meetings. This decision fosters optimism among traders and plays a role in bolstering the positive momentum in market sentiment.
Global Concerns Impacting Market Sentiment
On the flip side, there is growing concern regarding escalating tensions between Western nations and China. The United States initiated this by implementing regulations pertaining to investments in Chinese technology companies, a move that appears to be influencing the contemplation of similar actions by the United Kingdom and Europe. These developments are inducing a sense of unease among the populace.
Moreover, there's news about a major Chinese real estate company called Country Garden facing financial troubles and needing to reorganize its debt. This, along with worries about upcoming data from the US, is adding to the concerns. Chinese leaders are working hard to protect the value of their currency, the Yuan. This effort is making people more confident that China can manage its economic challenges. As a result, this positive feeling is supporting the recent cautious optimism in the region.
S&P500 (SPX) - Technical Analysis
The primary stock market index is the S&P 500, currently positioned at 4,671.1 points. A thorough analysis of the four-hour timeframe reveals a noteworthy technical perspective for the SPX. This perspective gains significance following its successful breach of the crucial 4,500 level.
In terms of downside potential, should the S&P 500 maintain its position below 4,757.94, there is the possibility of a decline towards the 4,437 level. Examining the longer timeframe, the S&P 500 has already achieved approximately 58.7% of its retracement from the 4,474 level. The presence of the 50-day exponential moving average provides a suggestive context for the continuation of the ongoing downtrend.
Both the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicators offer supportive readings, enhancing the probability of sustained downward momentum. Presently, breaking below 4,450 could potentially provide an opportunity to initiate a short position on the S&P 500, with a target set at 4,437 or even lower to the 4,400 level.
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