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Monday, July 17, 2017

S&P 500 and FTSE 100 charts (Jul 14 '17): bulls fight back but bears still lurking

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 consolidated below the (purple) down trend line during the first two days of the trading week - receiving good support from its rising 50 day EMA.

On Wed. Jul 12, the index formed a 10 points upward 'gap' and broke out above the down trend line. On Fri. Jul 14, the index rose to touch new intra-day and closing highs.

Note that a breakout with a 'gap' is considered to be more bullish technically. However, there was no significant increase in volumes during the breakout. Also, volumes on Friday decreased while the index touched a new high.

Daily technical indicators are looking bullish and showing upward momentum. MACD has crossed above its signal line in positive zone. RSI is climbing towards its overbought zone. Slow stochastic has entered its overbought zone.

Negative divergences visible on MACD and RSI - which touched lower tops while the index touched a new high - may trigger a pullback towards the down trend line.

The index is trading well above its three EMAs in a bull market.  US Fed's indication that low inflation would lead to a more gradual pace of monetary tightening was a trigger for bullish aggression.

On longer term weekly chart (not shown), the index closed at a new high - well above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are inside their respective overbought zones, but 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 has spent 6 weeks in a down trend after touching a lifetime high of 7599 on Jun 2.

The index successfully tested support from the 7300 level on Tue. Jul 11 - forming a small 'triple bottom' reversal pattern that triggered a technical bounce above its 20 day and 50 day EMAs on Wed. Jul 12.

Bears used the opportunity to sell. The index dropped below its 20 day and 50 day EMAs, and the 'support-resistance' level of 7385 - but with a 27 points gain on a weekly closing basis.

While the index remains in a down trend, it is trading above its rising 200 day EMA in a bull market. Of the three daily technical indicators, MACD and RSI are in bearish zones; Slow stochastic has crossed above its 50% level into bullish zone.

The 'support-resistance' level of 7385 has become a clear battle line between bulls and bears. (At the time of writing this post, the index is trading above its 20 day and 50 day EMAs and the 7385 level.)

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones but not showing much upward momentum.

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