Monday, September 25, 2017

S&P 500 and FTSE 100 charts (Sep 22 '17): bears getting ready to attack?

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 failed to build on the previous week's breakout above the 2490 level. The index touched a new high of 2509 on Wed. Sep 20, but closed almost flat for the week.

All three EMAs are rising, and the index is trading above them in a bull market. However, daily technical indicators are correcting overbought conditions and can trigger a correction or some more consolidation.

In case the index falls below the 2490 level - and the possibility can't be ruled out because of a bearish weekly pattern (see below) - expect support from the zone between 2450 & 2470.

The war of words between the US President and North Korea's 'rocket man' is creating unnecessary tension that is keeping global markets on tenterhooks. Uncertainty in the market may be just the opportunity that bears are looking for.

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market, but may be in the process of forming a bearish 'evening star' candlestick pattern. Weekly technical indicators are in bullish zones, but showing negative divergences by failing to touch new highs with the index.

FTSE 100 index chart pattern

The following comments appeared in last week's post on the daily bar chart pattern of FTSE 100: " ...the index is in the process of pulling back towards the 200 day EMA. Those who missed selling on Friday's downward break out can use the pullback as a selling opportunity."

The index pullback resulted in a weekly close above the 200 day EMA and the 'support/resistance' level of 7300 - with a 1.3% gain for the week.

Daily technical indicators are in the process of correcting oversold conditions, but remain in bearish zones. Any attempt at rallying further is likely to face resistance from the falling 20 day and 50 day EMAs.

A dark bearish shadow (viz. a 'descending triangle' at an index top) is covering the chart. Bulls have their work cut out to retrieve the situation.

On longer term weekly chart (not shown), the index bounced up after receiving support from its 50 week EMA, and closed well above its 200 week EMA in a long-term bull market. The 20 week EMA is forming a bearish 'rounding top' pattern. Weekly MACD is falling below its signal line in bullish zone. RSI is trying to move above its 50% level. Slow stochastic is ready to re-enter its oversold zone.

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