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Monday, April 11, 2016

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Apr 08, 2016

S&P 500 index chart


The following comments appeared in last week's post on the daily bar chart pattern of S&P 500: "Daily technical indicators are in their overbought zones, and showing negative divergences by failing to touch new highs with the index. Some correction or consolidation can be expected."

As expected, the index corrected a bit during the first two days of the week and then consolidated sideways during the next three days. At the time of writing this post, the sideways consolidation continues.

The rising 20 day EMA provided good support. The 'golden cross' of the 50 day EMA above the 200 day EMA is about to restore technical control to bulls.

Daily technical indicators have corrected overbought conditions but remain in bullish zones. Note that the MACD signal line is forming a 'rounding top' pattern and Slow stochastic is on the verge of dropping below its 50% level. These are bearish signs in the near term.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs for the 5th week in a row. The index is trading 230 points above its rising 200 week EMA in a long-term bull market. Weekly technical indicators are in bullish zones.

FTSE 100 index chart


The daily bar chart pattern of FTSE 100 continued its sideways consolidation during the week. The rising 50 day EMA provided good support. At the time of writing this post, the index has slipped down after testing resistance from its 200 day EMA.

Note that each test of a resistance level makes it weaker and more susceptible to a breach. In other words, the index may break out above its 200 day EMA soon.

Daily technical indicators are in bullish zones. Slow stochastic is showing good upward momentum, but MACD and RSI are moving sideways. 

On longer term weekly chart (not shown), the index closed above its rising 20 week EMA, but is trading below its sliding 50 week and 200 week EMAs in a long-term bear market. Weekly technical indicators are looking bullish.

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