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Monday, October 24, 2016

S&P 500 and FTSE 100 charts (Oct 21 '16): consolidating after bouncing up from support levels

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 dropped towards the support level of 2120 on Mon. Oct 17, but bounced up. However, bulls couldn't make much headway during the rest of the week as the index faced strong resistance from its falling 20 day EMA.

The index closed 8 points higher for the week, and is trading above its rising 200 day EMA in a bull market - but the longer it consolidates within the 'descending triangle' pattern the greater is the possibility of a sharp breakdown below the 2120 level.

Higher volumes on the last two days of the week (both down days) indicate that bears are unlikely to release their grip in a hurry.

Daily technical indicators are in bearish zones and not showing much upward momentum. The sideways consolidation may continue a bit longer before a likely drop to test support from the 200 day EMA can occur.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the 33rd week in a row. The index is correcting after forming a bearish 'rounding top' pattern. Weekly technical indicators are looking bearish, though MACD and RSI are still in bullish zones.

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 bounced up weakly after receiving good support from the 6940 level, and closed with a token weekly gain of 7 points.

Note that 6940 had acted as a resistance level during Aug-Sep '16. On Oct 3, the resistance level was breached convincingly and has turned into a support level.

All three EMAs are rising and the index is trading above them in a bull market. However, bulls may have to wait for a while before the index can touch a new high.

Daily technical indicators are in bullish zones but not showing any upward momentum. Expect some sideways consolidation in the near term.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the 17th week in a row. Weekly technical indicators are looking overbought and not showing any upward momentum. 

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