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Sunday, October 2, 2016

S&P 500 and FTSE 100 charts (Sep 30 '16): bears refusing to yield ground

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 continued its sideways consolidation within the support level of 2120 and the blue down trend line - oscillating about its converging 20 day and 50 day EMAs.

The following warning bell was sounded in last week's post: "The longer the index consolidates between 2120 and the blue down trend line, the more bearish will become the technical set upWhy? Because a bearish 'descending triangle' pattern will then get formed near a lifetime high. That could very well be a trend reversal pattern."

The index is above its three EMAs in bull territory, and closed marginally higher for the week. Friday's strong volumes may be a hint that bulls are gathering strength to cross above the hurdle of the blue down trend line soon.

Daily technical indicators are not looking very bullish. MACD is gradually rising above its signal line, but remains in negative zone. RSI is in neutral zone, trying to cling on to its 50% level. Slow stochastic is rising towards its overbought zone - from where it has been beating hasty retreats.

Some more consolidation is likely before the index decides to break out. Since the chart structure is bullish, the break out is expected to be upwards. But the formation of a bearish 'descending triangle' pattern should be observed closely. 

On longer term weekly chart (not shown), the index traded above its three rising weekly EMAs in a long-term bull market for the 30th week in a row. Weekly technical indicators are in bullish zones after correcting overbought conditions. 

FTSE 100 index chart pattern


The daily bar chart pattern of FTSE 100 rose to touch an intra-day high of 6941 on Thu. Sep 29 - its highest level in Sep '16 - but failed to cross above its Aug '16 top of 6955.

The index closed just below the 6900 level, losing 10 points for the week. However, a bullish 'ascending triangle' pattern may be forming - from which an upward break out above 6940 is likely.

All three daily technical indicators are in bullish zones. But MACD and RSI are not showing much upward momentum. Slow stochastic has re-entered its overbought zone.

Some sideways consolidation can be expected before the index can break out.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the 14th week in a row. Weekly MACD and Slow stochastic are inside their respective overbought zones. RSI a little below its overbought zone.

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