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Monday, May 2, 2016

Stock Index Chart Patterns: S&P 500 and FTSE 100 – Apr 29, 2016

S&P 500 index chart


The daily bar chart pattern of S&P 500 continued its correction from the Apr 20 top of 2111. The index slipped below 2080 on Mon. Apr 25, but bounced up to the 2100 level on Wed. Apr 27.

Profit booking on the last two days of the week dropped the index to a close below its 20 day EMA for the first time in 2 months. However, the 50 day and 200 day EMAs are rising, and the index is trading above them in bull territory.

Is the dip providing a buying opportunity? Or, will the index repeat the pattern formed during Nov-Dec '15?

All three technical indicators are showing downward momentum - hinting at a continuation of the correction. MACD has crossed below its signal line in positive zone. RSI is seeking support from its 50% level. Slow stochastic is falling rapidly towards its 50% level.

Despite trading in bull territory, the index has formed a bearish pattern of 'lower tops, lower bottoms' since touching a high of 2133 on Jul 20 '15. Failure to move above a previous top may allow bears to keep a foot in the door.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs for the 8th week in a row. The index is trading about 230 points above its rising 200 week EMA in a long-term bull market. Weekly technical indicators are in bullish zones, but showing downward momentum.

FTSE 100 index chart


The following remarks were made in last week's post on the daily bar chart pattern of FTSE 100: "Some more correction or consolidation is possible before the rally resumes." 

The index dropped to seek support from its 200 day EMA on Mon. Apr 25, and consolidated sideways during the rest of the week - just about managing to close at its long-term moving average.

Daily technical indicators are beginning to look bearish. MACD has dropped down after forming a 'double top' reversal pattern inside its overbought zone, and has crossed below its signal line. RSI and Slow stochastic have slipped below their respective 50% levels.

Some more correction can't be ruled out. Expect downside support from the zone between 6100-6200.

On longer term weekly chart (not shown), the index traded below its 200 week EMA throughout the week, but closed above its 20 week EMA. Weekly technical indicators are turning bearish. 

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