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Monday, May 1, 2017

S&P 500 and FTSE 100 charts (Apr 28 '17): bulls fightback strongly but bears refusing to give up

S&P 500 index chart pattern

After spending almost 8 weeks below the (purple) down trend line, the daily bar chart pattern of S&P 500 broke out with an upward 'gap' supported by strong volumes on Apr 24.

A break out with a 'gap' is considered to be a technically strong move. The index rose to test its previous (Mar 1) top of 2401 on Apr 26, but formed a 'reversal day' bar (higher high, lower close) and corrected down a bit.

Technical indicators are not showing any upward momentum. MACD and RSI are in bullish zones. Slow stochastic is about to drop from its overbought zone.

The index is trading above its three rising EMAs in a bull market. Some consolidation or correction towards the 20 day EMA is likely before a convincing break out above 2400 can occur.

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators have corrected overbought conditions, and showing some upward momentum inside bullish zones.

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 had broken down sharply below the 'rectangle' pattern on Apr 18, but had pulled back equally sharply to the lower edge of the 'rectangle' on Apr 24.

The following remark was made in last week's post: "Such pullbacks offer selling opportunities to those who may have missed selling on the downward breakout on Apr 18."

Note that the index managed to overcome resistances from the 20 day and 50 day EMAs. It briefly crossed the 7300 level intra-day on Apr 26 and closed within the 'rectangle'. Bears decided enough was enough. Their selling dropped the index below the 'rectangle' to the 7200 level. 

(On the closing line chart pattern - shown below - the pullback ended at the lower edge of the 'rectangle' on Apr 26. This is a good example of why one should study bar charts and line charts.)

Daily technical indicators are in bearish zones and showing downward momentum. Some more correction or consolidation is likely. The index continues to trade above its rising 200 day EMA in a bull market.

On longer term weekly chart (not shown), the index closed exactly at its 20 week EMA, but above its rising 50 week and 200 week EMAs in a long-term bull market. Weekly MACD and Slow stochastic are looking bearish and showing downward momentum. RSI has found support at its 50% level.

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