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Monday, April 3, 2017

S&P 500 and FTSE 100 charts (Mar 31 '17): bears working hard to contain bulls

S&P 500 index chart pattern


The following remark was made in last week's post on the daily bar chart pattern of S&P 500: "The 50 day EMA has provided good support so far. But that support is unlikely to hold."

The index had broken down sharply below a small 'symmetrical triangle' pattern after Trump withdrew his healthcare bill, and was expected to correct further.

It did fall below its 50 day EMA intra-day on Mon. Mar 27, but bounced up to close higher by the end of the day. The support from the 50 day EMA has technically not been breached yet.

The index managed to cross above its 20 day EMA during the next two days, but the rally appears to have fizzled out. For the past month, the index has formed a bearish pattern of 'lower tops, lower bottoms.'

A convincing move above the purple down trend line (currently at about 2375) is required for bulls to regain complete control.

Daily technical indicators are in bullish zones, but MACD and RSI are not showing much upward momentum. Slow stochastic is showing positive divergence by touching a higher top. A test of resistance from the down trend line may be on the cards. 

On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in the process of correcting overbought conditions.

FTSE 100 index chart pattern


The daily bar chart pattern of FTSE 100 is showing a text book technical break down and pullback pattern. 

After breaking down below the large 'rising wedge' pattern, the index dropped below its 50 day EMA intra-day on Mon. Mar 27, only to bounce up above its 20 day EMA in a pullback to the lower edge of the 'wedge'.

Those who missed selling on the initial breakdown got another opportunity to sell on the pullback. Which they obviously did, as the index dropped below its 20 day EMA.

The index may be forming 'head and shoulders' reversal pattern with the 'neckline' at 7250. A fall below 7250 will technically confirm the pattern - with a downward target of 7050.

Daily technical indicators are looking bearish, and hinting at some more correction.

On longer term weekly chart (not shown), the index closed slightly lower for the week but well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are correcting overbought conditions, and showing downward momentum.

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