US financial markets are closed today in observance of Independence Day. Investor optimism was fuelled by the S&P 500 index (US SPX 500 mini on FXOpen), which climbed to a fresh record high yesterday, surpassing 6,280.
The rally was underpinned by stronger-than-expected US labour market data. Analysts polled by ForexFactory had forecast an uptick in unemployment from 4.2% to 4.3%, but instead, the rate fell to 4.1%, surprising markets.
However, the subsequent pullback (arrow 2) has become noteworthy. It indicates that sellers are stepping in near resistance.
If the index retreats towards the lower orange line, this could invalidate the recent bullish impulse and form a classic bearish engulfing pattern.
Overall, there are signs that bears are attempting to regain control after a 5% rally over the past 10 days. A potential break below the orange trendline remains a risk, which could see the price moving towards the midpoint of the blue channel.
Outlook
What happens next will largely depend on developments around US trade policy. With key White House tariff deadlines approaching, traders should prepare for renewed volatility in the coming week.
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