Monday, November 20, 2017

S&P 500 and FTSE 100 charts (Nov 17 '17): bears flexing their muscles again

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 made a couple of attempts on Mon. (Nov 13) and Thu. (Nov 16) to pullback to the lower edge of the 'rising wedge' (refer last week's post), but faced resistance from the 2590 level.

The index has been in a down trend (marked by purple down trend line) since touching a high of 2597 on Nov 7. The pullbacks were used by bears to sell. Strong volumes on recent down days mean that bears may not retreat in a hurry.

The index managed to close above its three EMAs in bull territory, with just a 3 points loss for the week. Bulls are fighting hard to maintain their dominance.

Daily technical indicators are looking bearish. MACD and RSI are showing downward momentum in bullish zones. Slow stochastic has slipped into bearish zone. All three indicators are showing negative divergences by touching lower bottoms on Wed. (Nov 15) while the index touched a higher bottom.

The index is trading well above its rising 50 day and 200 day EMAs in a bull market. However, this bull market is a little long in the tooth, and hasn't faced a decent 8-10% correction in quite a while. So, part profit booking and waiting for a convincing breakout above the (purple) down trend line may be good ideas.

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 started correcting inside their respective overbought zones. 

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 had dropped and closed below its 20 day and 50 day EMAs and the (purple) down trend line in the previous week. Bearish technical indicators had hinted at some more correction (refer last week's post).

The index continued to fall towards its 200 day EMA, but appears to have found some support near the 7350 level. Daily technical indicators are in bearish zones, but RSI and Slow stochastic have stopped falling.

Negative divergence visible on the Slow stochastic, which touched a lower bottom inside its oversold zone while the index touched a much higher bottom, has left the door open for the index to test support from its 200 day EMA. 

However, an oversold Slow stochastic can also trigger a pullback towards the (purple) down trend line. (At the time of writing this post, the index is again testing support from the 7350 level.)

On longer term weekly chart (not shown), the index closed below its 20 week EMA but above its 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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