Monday, March 19, 2018

S&P 500 and FTSE 100 charts (Mar 16, 2018): bulls forced to retreat

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: "It may be a bit early for bulls to start celebrating." 

The index rose past its Feb 27 top of 2789 to touch an intra-day high of 2802 on Tue. Mar 13 but closed much lower, forming a 'reversal day' bar that triggered a pullback to the top of the 'triangle'.

The index touched an intra-day low of 2741 on Thu. Mar 15, but bounced up to close just above the 2750 level on Fri. Mar 16 - forming an 'inverted hammer' candlestick. The accompanying volume surge is often a sign of trend reversal.

Daily technical indicators are in bullish zones but not showing any upward momentum. MACD is moving sideways above its signal line. RSI is trying to rise after receiving support from its 50% level. 

Slow stochastic is showing negative divergence by touching a lower top and forming a 'double top' reversal pattern inside its overbought zone. Bears may try to press home their advantage.

The index is trading well above its rising 200 day EMA in a long term bull market. However, the sharp volatility during the past 6 weeks should be treated with caution.

On longer term weekly chart (not shown), the index formed a weekly 'reversal' bar and closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones but not showing any upward momentum.

FTSE 100 index chart pattern


The daily bar chart pattern of FTSE 100 failed to overcome resistance from its falling 20 day EMA, and dropped below the long-term 'support/resistance' level of 7200.

The index is trading below its three EMAs in a bear market that was technically confirmed by the 'death cross' (blue circle) of the 50 day EMA below the 200 day EMA.

Daily technical indicators are showing upward momentum. However, all three are in bearish zones. (At the time of writing this post, the index is trading below 7100.)

The 'double bottom' pattern may get tested.

On longer term weekly chart (not shown), the index closed below the support level of 7200. It remains below its 20 week and 50 week EMAs but above its 200 week EMA in a long-term bull market. Weekly MACD and Slow stochastic are inside their oversold zones. RSI is falling below its 50% level.

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