Amazon deals

Monday, March 23, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Mar 20, 2015

S&P 500 Index Chart

SPX_Mar2015

The daily bar chart pattern of S&P 500 bounced up smartly from the twin support of the 2040 level and the lower edge of the large ‘rising wedge’ pattern. All three EMAs have resumed their upward moves, and the index is trading above them in a long-term bull market.

Bears may have lost the battle, but not the war. As long as the index trades within the bearish ‘wedge’ pattern, expect the bears to fight back at any time. Note the huge volume surge on Fri. Mar 20, and compare it with a similar volume surge on Dec 19 ‘14. It may be a sign of ‘buying exhaustion’.

Technical indicators are back in bullish zones. MACD has crossed above its signal line in positive territory. RSI has moved above its 50% level. Slow stochastic is rising towards its overbought zone.

Bulls still have some work left. First is a cross above its previous (Feb 25 ‘15) top of 2119.60. More importantly, the index needs to move above the upper edge of the ‘rising wedge’. The first task will be easier than the second.

On longer term weekly chart (not shown), the index received support from its 20 week EMA, and bounced up to close well above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones and showing upward momentum.

FTSE 100 Index Chart

FTSE_Mar2015

The daily bar chart pattern of FTSE 100 bounced up strongly to touch a lifetime high of 7024 on Fri. Mar 20 ‘15 after receiving good support from its 200 day EMA. However, the index appears to be trading within a large bearish ‘rising wedge’ pattern since the beginning of the year.

Daily technical indicators are looking bullish. MACD has crossed above its signal line in positive zone. RSI is moving up towards its overbought zone. Slow stochastic is well inside its overbought zone.

Note that all three indicators failed to touch new highs with the index. The combined negative divergences can bring the current rally to a halt.

On longer term weekly chart (not shown), the index received support from its 20 week EMA and closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with the index.

No comments: