Sunday, September 27, 2015

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Sep 25, 2015

S&P 500 Index Chart


The following comment appeared in last week’s post on the daily bar chart pattern of S&P 500: “The index has formed a bearish ‘rising wedge’ pattern, from which the likely break out is downwards.”

The index made a futile bid to rally within the ‘rising wedge’ pattern on Mon. Sep 21 ‘15 and touched the 1980 level intra-day, but resistance from the falling 20 day EMA put paid to any bullish hopes.

The index dropped sharply below the wedge on Tue. Sep 22, and traded below the wedge for the rest of the week – touching an intra-day low of 1909 on Thu. Sep 24 before recovering to close more than 1.3% lower at 1931.

Daily technical indicators have turned bearish. MACD is falling towards its signal line after failing to emerge from its oversold zone. RSI is gradually sliding down below its 50% level. Slow stochastic has dropped to the edge of its oversold zone.

The index is trading below its three falling EMAs in bear territory.

On longer term weekly chart (not shown), the index 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. MACD is falling deeper inside its oversold zone. RSI and Slow stochastic are in bearish zones, and showing downward momentum. The index may fall lower to test the support zone between 1750-1800.

FTSE 100 Index Chart


The daily bar chart pattern of FTSE 100 broke down below the ‘rectangle’ pattern – within which it was trading for three weeks – on Tue. Sep 22. The strong volumes (not shown) indicated that bear dominance was likely to increase.

But the unreliability of ‘rectangle’ patterns was evident as the index managed to recover and climb back inside the ‘rectangle’ by the end of the week and actually closed a few points higher on a weekly closing basis.

Daily technical indicators are in bearish zones, but showing some upward momentum. However, there isn’t much hope for bulls just yet. The index continues to trade below its three EMAs in a bear market.

On longer term weekly chart (not shown), the index closed well below its three weekly EMAs for the sixth week in a row, and may have entered a long-term bear market. Weekly technical indicators are in bearish zones, but their downward momentum is slowing down.

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