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Monday, April 24, 2017

S&P 500 and FTSE 100 charts (Apr 21 '17): bears dominate but bulls try to fight back

S&P 500 index chart pattern


The (purple) down trend line continues to dominate the daily bar chart pattern of S&P 500. Another attempt at a rally faced resistance from the down trend line.

The index is trading well above its rising 200 day EMA in a bull market, and closed about 20 points higher for the week. The fact that the previous (Mar 27) low of 2322 has not been breached should encourage bulls.

Daily technical indicators are in bearish zones. MACD and RSI are not showing any upward momentum. Strong volumes on down days mean bears remain active.

Expect some more consolidation or correction below the down trend line before an upward break out can occur.  

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

FTSE 100 index chart pattern


Note the following comments from last week's post on the daily bar chart pattern of FTSE 100: "... the index may break out either above or below the 'rectangle'. Since a 'rectangle' is often a continuation pattern, the logical break out is downwards."

After the long Easter break, the index succumbed to bear selling and dropped sharply below the 'rectangle' to 7150 on Tue. Apr 18. Over the next couple of days, the index dropped further to 7100. 

The possibility of a 130 points move from the breakout point was mentioned in an earlier post

At the time of writing this post, the index pulled back sharply to the lower edge of the 'rectangle' - only to face considerable resistance from the falling 20 day and 50 day EMAs. Such pullbacks offer selling opportunities to those who may have missed selling on the downward breakout on Apr 18.

Daily technical indicators are correcting oversold conditions but remain in bearish zones.

On longer term weekly chart (not shown), the index closed below its 20 week EMA for the first time in 5 months, but above its rising 50 week and 200 week EMAs in a long-term bull market. Weekly technical indicators are looking bearish and showing downward momentum.

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