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Monday, April 13, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Apr 10, 2015

S&P 500 Index Chart

SPX_Apr1015

The daily bar chart pattern of S&P 500 closed 35 points (1.7%) higher on a weekly basis, and climbed back inside the large ‘rising wedge’ pattern (see last week’s post) once again. The index is consolidating sideways within a ‘symmetrical triangle’ pattern since the last week of Feb ‘15.

Triangles are usually continuation patterns, so the likely break out from the triangle should be upwards. If that happens, the bearish ‘rising wedge’ pattern is likely to be negated. However, triangles are unreliable patterns, so it is better to wait for the eventual break out before initiating any buy/sell action.

Technical indicators are in bullish zones. MACD has crossed above its signal line and entered positive territory. RSI and Slow stochastic have climbed above their respective 50% levels. The index closed above its three EMAs in bull territory.

On longer term weekly chart (not shown), the index received good 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 their upward momentum is weak. Be prepared for another bear attack if the index fails to break out convincingly above the triangle.

FTSE 100 Index Chart

FTSE_Apr1015

In a holiday-truncated week, the daily bar chart pattern of FTSE 100 rallied splendidly to close at a lifetime high. The index closed above its three EMAs in bull territory, but remains within the large ‘rising wedge’ pattern within which it has been trading for the past three months.

Daily technical indicators are in bullish zones, but all three are showing negative divergences by failing to touch new highs with the index. Bears may come to the fore if the index fails to convincingly cross above the ‘wedge’ pattern.

On longer term weekly chart (not shown), the index closed at a lifetime high - 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.

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