Fed stays cautious as S&P 500 tests key resistance: Can bulls push higher?
Pretty much what was expected from the Fed—rates held steady at 4.25–4.50%. No surprise, no pivot talk either. Powell stayed on script: inflation is improving, but not enough to move yet. He kept it open-ended, data-dependent as always.
Markets didn’t really react one way or the other. But forward-looking? Still in wait-and-see mode. A rate cut in September is still on the table, but not a given. Everything now rides on the next few inflation and jobs prints.
S&P 500 chart check (four-hour)
Price is sitting right at the upper bound of the channel that’s been intact since late 2023. Every time we’ve touched this upper trendline, we’ve seen some form of cooling or sideways grind—and this setup looks no different.
What’s more interesting here is the RSI divergence creeping in. Price keeps grinding up, but RSI has been making lower highs since early July. Classic sign of momentum fading.
Technicals lining up
- Channel resistance: Price is testing the upper band of a multi-month rising channel. Historically a place where we pause or pull back.
- RSI bearish divergence: Price up, RSI down = potential exhaustion.
- Momentum stall: RSI hovering near 65–70 zone, not overbought but close. It wouldn’t take much for it to roll over.
How this sets us up
We’ve had a strong run, but we’re now at a key inflection. No breakout yet. No breakdown either. Just range-bound price action with cooling momentum. If inflation continues to come in soft and jobs ease a bit, the Fed has room to cut—but until we get confirmation, markets may just drift.
Bias: Neutral to sideways.
Catalyst: Upcoming PCE + CPI + NFP.
Trigger zones:
- Resistance: 6,400–6,420.
- Support: 6,150 and 5,950.
Author
Zorrays Junaid
Alchemy Markets
Zorrays Junaid has extensive combined experience in the financial markets as a portfolio manager and trading coach. More recently, he is an Analyst with Alchemy Markets, and has contributed to DailyFX and Elliott Wave Forecast in the past.
