The S&P 500 index is extending its gains on the day following mostly dovish comments by the FOMC Chair Jerome Powell after the Fed kept its key interest rate benchmark unchanged at 0.25%.
The FOMC Chief says the Fed is ready to use the “full range of its tools to prop up the US economy until the recovery from the coronavirus pandemic is complete. While the FOMC Chief indicated that the Fed would conclude its policy review “in the near future”, no specifics on yield control or average inflation targeting were mentioned in the speech as at the time of writing.
The S&P 500 index is up by 1.15% and trades at 3255.5.
The FOMC’s action and subsequent comments have energized the S&P 500 and allowed it to bounce from the lower edge of the rising wedge and the 3228.4 support line. The daily candle is now testing the 3256.1 price resistance (88.6% Fibonacci retracement from the swing high of 27 January 2020 to the swing low of 23 March 2020). A break above this level pushes the index towards the wedge’s upper border. A move above this border enables the index to attain the 3335.5 resistance. This scenario would see the extension of the recovery in the S&P 500 and invalidates the wedge pattern.
On the flip side, rejection at 3256.1 could initiate a further retest of the 3228.4 support. A breakdown of this support also completes the rising wedge’s evolution, opening the door for a push towards 3137.0. Attainment of 3070.8 and 3028.3 cannot be ruled out in such circumstances.
