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Monday, September 19, 2016

S&P 500 and FTSE 100 charts (Sep 16 '16): bulls trying to regroup at support zones

S&P 500 index chart pattern

The following comments were made in last week's post on the daily bar chart pattern of S&P 500: "...the index may use the 'support-resistance zone' between 2110-2120 to organise a pullback rally towards the lower edge of the 'rectangle'. Bears are likely to 'sell the rally'."

As if on cue, the index slipped into the 'support-resistance' zone on Mon. Sep 12, only to bounce up and close above its 50 day EMA at the lower edge of the 'rectangle'.

Bears resumed their selling from Tue. Sep 13. However, the 'support-resistance' zone held firm. The index consolidated sideways below its 50 day EMA for the rest of the week - gaining 0.5% on a weekly closing basis. 

The volume spike on Fri. Sep 16 may be a sign of 'selling exhaustion'. 

All three daily technical indicators are in bearish zones, but giving conflicting signals. MACD is showing downward momentum. RSI is moving sideways. Slow stochastic is showing slight upward momentum.

The index is trading above its rising 200 day EMA in a bull market. The correction below the 'rectangle' pattern and the subsequent sideways consolidation is improving the technical 'health' of the chart. That may enable bulls to regroup and resume their domination.

On longer term weekly chart (not shown), the index dropped below its 20 week EMA intra-week, but closed above its three weekly EMAs in a long-term bull market for the 28th week in a row. Weekly technical indicators have corrected overbought conditions but remain in bullish zones.

FTSE 100 index chart pattern

The following comments were made in last week's post on the daily bar chart pattern of FTSE 100"The index should receive support from the 'support-resistance zone' between 6600-6750. The rising 50 day EMA is within the support zone, and can provide additional support."

The index opened trading on Mon. Sep 12 with a drop inside the 'support-resistance' zone and a close below its 50 day EMA. For the rest of the week, the index traded sideways within the 'support-resistance' zone and tried to cling on to its 50 day EMA.

FTSE lost about 1% on a weekly closing basis. At the time of writing this post, it has recouped its losses and bounced up above its 20 day EMA.

Daily technical indicators are turning bullish. MACD is moving sideways in negative zone. RSI has crossed above its 50% level. Slow stochastic has emerged from its oversold zone.

The Sep 2 top of 6928 needs to be crossed if bulls are to regain their control.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the 12th week in a row. Weekly technical indicators have corrected overbought conditions but remain in bullish zones.

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