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Monday, March 9, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Mar 06, 2015

S&P 500 Index Chart

SPX_Mar0615

The daily bar chart pattern of S&P 500 touched a lower top of 2117.50 on Mon. Mar 2 ‘15 – forming a small ‘double top’ reversal pattern – and dropped down to test support from its 50 day EMA by the end of the week. The possibility of a correction was mentioned in last week’s post.

The index lost about 1.6% on a weekly closing basis, but is still trading well above its rising 200 day EMA in a long-term bull market. Some more correction is possible. The level to watch will be 2030 – which corresponds to the lower edge of the large ‘rising wedge’ pattern within which S&P 500 has been trading for more than 6 months.

Daily technical indicators are looking bearish. MACD formed a bearish ‘rounding top’ pattern and crossed below its signal line in positive territory. RSI and Slow stochastic have dropped below their respective 50% levels, and their downward momentum is increasing.

On longer term weekly chart (not shown), the index managed to close above its three weekly EMAs in a long-term bull market, but formed a ‘distribution bar’ pattern (open near week’s high, close near week’s low). Weekly technical indicators are in bullish zones but showing downward momentum. The index can correct some more.

FTSE 100 Index Chart

FTSE_Mar0615

The following comment appeared in last week’s post on the daily bar chart pattern of FTSE 100: “The more likely move (of the index) should be a drop below the ‘wedge’.”

The index moved up to touch a new high of 6974 on Mon. Mar 2 ‘15, only to drop below the wedge on the very next day. The index pulled back inside the ‘wedge’ by Thu. Mar 5 – raising bullish hopes – but again dropped below the ‘wedge’ by the end of the week.

The index lost a meagre 35 points (0.5%) on a weekly closing basis, but is trading below the ‘wedge’ and the 20 day EMA at the time of writing this post.

Daily technical indicators are in bullish zones, but showing strong downward momentum. MACD is sliding below its signal line in positive zone. RSI and Slow stochastic are poised to cross below their respective 50% levels.

All three indicators showed negative divergences by failing to touch new highs with the index on Mon. Mar 2. Some more correction is likely.

On longer term weekly chart (not shown), the index is trading well above its three weekly EMAs in a long-term bull market, but formed a ‘reversal week’ pattern (higher high, lower close). Weekly technical indicators are in bullish zones, but showing clear signs of turning downwards.

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