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Monday, August 8, 2016

S&P 500 and FTSE 100 charts (Aug 05 '16): rise to lifetime highs

S&P 500 index chart pattern


The daily bar chart pattern of S&P 500 broke downwards from the previous two weeks' consolidation zone to touch a low of 2148 on Aug 2, but bounced up after receiving good support from its rising 20 day EMA.

Strong non-farm payroll data propelled the index to a new high of 2183 on Fri. Aug 5. All three EMAs are rising, and the index continues to trade above them in a bull market.

Daily technical indicators have corrected overbought conditions, and are showing upward momentum in bullish zones. However, all three are showing negative divergences by failing to touch new highs with the index.

Expect some correction or consolidation around current level. 

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market for the 22nd week in a row. Weekly technical indicators are looking overbought.

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 corrected down below its 20 day EMA, but bounced up after receiving good support from the 6620 level to touch a 52 week high of 6800.

A 25 bps cut in interest rate and announcement of another round of Quantitative Easing to boost a sagging economy helped the index recovery.

Note how the 6620 level had earlier provided resistance to the index in Jul '16, but subsequently turned into a support level.

Daily technical indicators are in bullish zones after correcting overbought conditions. But all three are showing negative divergences by failing to touch new highs with the index.

Some correction or consolidation is likely. The index is trading above its three EMAs in a bull market. So, dips are providing adding opportunities.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the 6th week in a row. The 'golden cross' of the 50 week EMA above the 200 week EMA is imminent. Weekly technical indicators are looking overbought.

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