<p>Last Friday the <a target=“_blank“ href=“https://www.forexlive.com/news/us-nonfarm-payroll-517k-vs-185k-estimate-unemployment-rate-34-vs-35-estimate-20230203/“ target=“_blank“ rel=“follow“>NFP
report</a> surprised everyone with a huge beat to expectations, 517K jobs added
compared to 185K expected, and the unemployment rate fell to 3.4%, the lowest
in 53 years. The average hourly earnings though remained unchanged at 0.3% M/M
and fell to 4.4% Y/Y. Looks nice with labour market strength and wage
disinflation. Soft landing vibes… </p><p>Some time later the <a target=“_blank“ href=“https://www.forexlive.com/news/ism-us-nonmanufacturing-pmi-index-552-versus-504-estimate-20230203/“ target=“_blank“ rel=“follow“>ISM
Services PMI</a> surprised to the upside with a big jump back into
expansion. Activity in the services sector seems to have picked up again, which
makes wonder if the recent easing in financial conditions led to a
reacceleration in economic activity. </p><p>Looking forward, will this make it harder
for inflation to come back to the Fed’s 2% target? And will the Fed need to go
higher than projected in their December 2022 meeting?</p><p>S&P500 Technical Analysis</p><p>On the daily chart above, we can
see that the price couldn’t break the 4175 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> after very strong economic
reports. Maybe the bulls are getting cautious as the Fed may be forced to go
higher with interest rates or indeed hold for longer than previously expected. </p><p>The bulls will need a clear break
out of that resistance to target the next resistance at 4300. The blue minor
upward <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“ target=“_blank“ rel=“follow“>trendline</a> for now will act as support for
the bullish trend. A break below that trendline and things start to get
interesting for the bears.</p><p>On the 4 hour chart above, we can
see that the price is struggling at the resistance. From a risk management
standpoint, a pullback to the trendline and one of the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“ target=“_blank“ rel=“follow“>Fibonacci
retracement levels</a> would offer a better risk to reward trade. </p><p>Looking at the 1 hour chart, we can see the two possible
scenarios: </p><p>·
Get
above the 4208 resistance and the bulls can try to extend the move to the next
resistance at 4300.</p><p>·
Get
below the 4133 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a>
and it opens up a move lower to possibly 4050 with a breakout below the
trendline leading to further sell off.</p>
report</a> surprised everyone with a huge beat to expectations, 517K jobs added
compared to 185K expected, and the unemployment rate fell to 3.4%, the lowest
in 53 years. The average hourly earnings though remained unchanged at 0.3% M/M
and fell to 4.4% Y/Y. Looks nice with labour market strength and wage
disinflation. Soft landing vibes… </p><p>Some time later the <a target=“_blank“ href=“https://www.forexlive.com/news/ism-us-nonmanufacturing-pmi-index-552-versus-504-estimate-20230203/“ target=“_blank“ rel=“follow“>ISM
Services PMI</a> surprised to the upside with a big jump back into
expansion. Activity in the services sector seems to have picked up again, which
makes wonder if the recent easing in financial conditions led to a
reacceleration in economic activity. </p><p>Looking forward, will this make it harder
for inflation to come back to the Fed’s 2% target? And will the Fed need to go
higher than projected in their December 2022 meeting?</p><p>S&P500 Technical Analysis</p><p>On the daily chart above, we can
see that the price couldn’t break the 4175 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> after very strong economic
reports. Maybe the bulls are getting cautious as the Fed may be forced to go
higher with interest rates or indeed hold for longer than previously expected. </p><p>The bulls will need a clear break
out of that resistance to target the next resistance at 4300. The blue minor
upward <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“ target=“_blank“ rel=“follow“>trendline</a> for now will act as support for
the bullish trend. A break below that trendline and things start to get
interesting for the bears.</p><p>On the 4 hour chart above, we can
see that the price is struggling at the resistance. From a risk management
standpoint, a pullback to the trendline and one of the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“ target=“_blank“ rel=“follow“>Fibonacci
retracement levels</a> would offer a better risk to reward trade. </p><p>Looking at the 1 hour chart, we can see the two possible
scenarios: </p><p>·
Get
above the 4208 resistance and the bulls can try to extend the move to the next
resistance at 4300.</p><p>·
Get
below the 4133 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a>
and it opens up a move lower to possibly 4050 with a breakout below the
trendline leading to further sell off.</p>
This article was written by ForexLive at www.forexlive.com.