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Saturday, June 28, 2014

Stock Index Chart Patterns: CAC 40, DAX, RTS – Jun 27, ‘14

CAC 40 Index Chart (France)

CAC_Jun2714

The following comments were made in last week’s analysis of the 6 months daily bar chart pattern of CAC 40: “The index rose to touch a lower top of 4582 on Thu. Jun 19, and dropped to a marginally lower close for the week. The lower top leaves the door open for a continuation of the corrective move next week.”

The index dropped below its 20 day and 50 day EMAs into the support zone between 4420-4500. Despite an intra-day breach of 4420 on Thu. Jun 26, the support zone should prevent a deeper fall.

Technical indicators are looking bearish, and a bit oversold. MACD has entered its negative zone, and is falling below its signal line. RSI is just above the edge of its oversold zone, but its fall has stalled. Slow stochastic has entered its oversold zone.

In case bear selling overwhelms the bulls, expect much stronger support from the 4350 level. The index is trading well above its rising 200 day EMA. The long-term bull market is under no threat. The correction is providing an opportunity to add.

On longer term weekly chart (not shown), the index is receiving support from its 20 week EMA.

DAX Index Chart (Germany)

DAX_Jun2714

In last week’s analysis of the 6 months daily bar chart pattern of DAX, there were some bearish signals: the index formed a ‘shooting star’ candlestick pattern supported by highest volumes in 9 months, and also formed a ‘broadening top’ pattern.

The combination was a recipe for reversal of the up trend. So far, the index has corrected only 2% from its top of 10051, and has received good support from its 50 day EMA and the support zone between 9600–9800 (mentioned two weeks back). The long-term bull market is under no threat as yet.

Technical indicators are looking bearish. MACD is positive, but falling below its signal line. RSI has dropped below its 50% level. Slow stochastic has moved down to the edge of its oversold zone. Expect some more correction or consolidation.

The correction is providing an adding opportunity. But maintain a stop-loss at 9300.

RTS Index Chart (Russia)

RTSI_Jun2714

The 6 months daily bar chart pattern of RTSI continued its rally, rising to touch a new high just short of 1425. The index could not sustain above the 1400 level for long, but closed the week with a gain of 21 points.

The rising 50 day EMA is on the verge of crossing above the 200 day EMA. The ‘golden cross’ will technically confirm a return to a bull market.

Technical indicators are correcting overbought conditions, but remain in bullish zones. However, all three continue to show negative divergences by failing to touch new highs with the index. A correction may be just around the corner.

On longer term weekly chart (not shown). the index is trading above its 20 week and 50 week EMAs but facing resistance from its 200 week EMA. Technically, the long-term bear market isn’t over yet.

Only a strong move above the 200 week EMA and the Oct ‘13 top of 1525 will break the bearish pattern of lower tops and lower bottoms. Looks like bulls have their work cut out.

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