Stock Index Chart Patterns: S&P 500 and FTSE 100 – Sep 18, 2015

S&P 500 Index Chart

The daily bar chart pattern of S&P 500 climbed above the 2000 level and the falling 50 day EMA on intra-day basis on Thu. Sep 17, but formed a ‘reversal day’ pattern (higher high, lower close). That was just the signal bears were waiting for.

The index dropped on huge volumes to close below all three EMAs in bear territory by the end of the week. The index has formed a bearish ‘rising wedge’ pattern, from which the likely break out is downwards.

Daily technical indicators are turning bearish. MACD was in the process of correcting oversold condition, but its upward momentum has stalled. RSI faced strong resistance from its 50% level and has started to move down. Slow stochastic has dropped from its overbought zone.

On longer term weekly chart (not shown), the index formed a ‘reversal bar’ (higher high, slightly lower close) and closed below its falling 20 week and 50 week EMAs but is trading above its rising 200 week EMA in a long-term bull market. Weekly technical indicators are in bearish zones, and showing downward momentum. The index can drop to the support zone between 1750-1800.

FTSE 100 Index Chart

The daily bar chart pattern of FTSE 100 continued to consolidate sideways within a ‘rectangle’ pattern. The index briefly ventured above its falling 20 day EMA before dropping on strong volumes (not shown) to close below all its three EMAs in bear territory.

‘Rectangle’ patterns tend to be unreliable. That means a break out can occur either above or below the pattern. As the index has been trading in a bear market for more than 2 months, the expected break out is downwards.

Daily technical indicators are turning bearish. MACD failed to emerge from its oversold zone and its upward momentum has stalled. RSI faced resistance from its 50% level and has started to fall. Slow stochastic is above its 50% level but zigzagging sideways.

On longer term weekly chart (not shown), the index closed well below its three weekly EMAs for the fifth week in a row, and may have entered a long-term bear market. Weekly technical indicators are in bearish zones, with MACD sliding deeper inside its oversold zone.