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Monday, June 5, 2017

S&P 500 and FTSE 100 charts (Jun 02 '17): touch new highs again, but bears may be getting ready to strike

S&P 500 index chart pattern


The following comment was made in last week's post on the daily bar chart pattern of S&P 500: "Some consolidation around current levels and a pullback towards 2400 are possibilities."

In a holiday-shortened trading week, the index consolidated sideways on Tue. and Wed. (May 30 & 31), dropping to a low of 2403 on Wed. with a volume surge before bouncing up to close just a point lower than Tuesday's close of 2413.

The index rose to touch a new high of 2440 on Fri. Jun 2, but closed a point lower - gaining almost 1% on a weekly closing basis.

All three EMAs are rising, and the index is trading above them in a bull market. However, daily technical indicators are looking overbought. Also, the previous two days' rally was supported by sliding volumes.

Some consolidation, and a correction towards 2420 are possibilities. 

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 are looking overbought and showing negative divergences by failing to touch new highs with the index.

FTSE 100 index chart pattern



The daily bar chart pattern of FTSE 100 touched a new high of 7599 on Fri. Jun 2, but closed at 7548 - just 4 points higher than the day's opening level, and absolutely flat for the week.

A 'shooting star' candlestick pattern, which often marks the end of an intermediate up move, was formed by Friday's trade.

Daily technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with the index. 

Slow stochastic has started to fall after forming a 'double top' reversal pattern inside its overbought zone - giving an early warning of a correction.

The index continued to trade within a bearish 'rising wedge' pattern. A downward breakout from the pattern - towards the rising 20 day EMA - is likely.

On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market, but formed a 'long-legged doji' candlestick pattern that often indicates a change of trend. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index.

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