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Monday, April 6, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Apr 02, 2015

S&P 500 Index Chart

SPX_Apr0215

In a holiday-truncated trading week, the daily bar chart pattern of S&P 500 closed marginally higher on a weekly basis, but dropped below the large ‘rising wedge’ pattern once again after briefly pulling back inside the ‘wedge’.

The index closed below its 20 day and 50 day EMAs, but is trading well above its rising 200 day EMA in a long-term bull market. Volumes on Tue. and Wed. (which were ‘down days’) were higher than volumes on Mon. and Thur. (which were ‘up days’). Bears are in no mood to give up just yet.

Some good news for bulls: the index stayed above the 2040 level during the week. A drop below 2040 will technically confirm a ‘double top’ reversal pattern (forming within the large ‘rising wedge’ pattern).

Technical indicators are in bearish zones. MACD is falling below its signal line in negative territory. RSI and Slow stochastic are below their respective 50% levels. The stage is set for a fight for control of the 2040 level.

On longer term weekly chart (not shown), the index bounced up after receiving support from its 20 week EMA, 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. The index may be in the midst of a topping formation.

FTSE 100 Index Chart

FTSE_Apr0215

The following remarks appeared in last week’s analysis of the daily bar chart pattern of FTSE 100: “The prospect of a drop below the ‘wedge’ is looming large.”

The index fell sharply below the ‘wedge’ on Tue. Mar 31, supported by strong volumes (not shown on chart). On the next two days, the index pulled back to the lower edge of the ‘rising wedge’ pattern, but closed below its 20 day and 50 day EMAs – losing 22 points on a weekly basis.

The index is trading above its rising 200 day EMA in a bull market – but for how much longer?

Technical indicators are in bearish zones. MACD has entered negative zone below its falling signal line. RSI is below its 50% level, but showing mild upward momentum. Slow stochastic is plummeting towards its oversold zone.

A drop below the 200 day EMA may signal a trend reversal.

On longer term weekly chart (not shown), the index bounced up after receiving support from its 20 week EMA, and closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but showing downward momentum.

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