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Monday, March 20, 2017

S&P 500 and FTSE 100 charts (Mar 17 '17): bears getting ready to mount another attack?

S&P 500 index chart pattern


The following was the concluding comment in last week's post on the daily bar chart pattern of S&P 500: "Weekly technical indicators are still looking overbought, and hinting at some consolidation."

The index dropped down to test support from its rising 20 day EMA for the second time in two weeks, bounced up with good volume support but drifted sideways to close with a modest 6 points gain for the week.

The rate hike by the US Fed was expected, but the dovish stance on future rate hikes disappointed bulls. The US Dollar index slipped down.

After touching a lifetime high of 2401 on Mar 1, the index has been consolidating sideways within a small 'symmetrical triangle' pattern, while trading above its three rising EMAs in a bull market.

The logical breakout from the triangle should be upwards. However, triangles tend to be unreliable patterns. The sharp volume spike on Fri. Mar 17 raises concerns of another bear attack.

Daily technical indicators have corrected overbought conditions, but giving mixed signals. All three are in bullish zones, but MACD and RSI are showing downward momentum. Slow stochastic is showing upward momentum.

Wait for a breakout above 2400 or a correction below 2350 to decide whether to buy or sell.

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are still looking overbought, and not showing any upward momentum. Expect some more consolidation or correction. 

FTSE 100 index chart pattern


The daily bar chart pattern of FTSE 100 moved convincingly above its previous (Mar 2) top on Thu Mar 16, and touched new lifetime intra-day (7447) and closing (7425) highs on Fri Mar 17. 

The index gained more than 1.1% for the week, and is trading well above its three rising EMAs in a bull market.

Daily technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with the index. A correction may be on the cards. (The index is trading about 15 points lower at the time of writing this post.)

The entire trading for the past two months has been within a large 'rising wedge' pattern from which the likely breakout is downwards. Maintain a stop-loss at 7300.

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are looking overbought and their upward momentum has stalled.

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