Monday, April 30, 2018

S&P 500 and FTSE 100 charts (Apr 27, 2018): bears give up some ground

S&P 500 index chart pattern

The daily bar chart pattern of S&P 500 had broken out below the 'rising wedge' pattern intra-day on Fri. Apr 20, but managed to close exactly at the lower edge of the 'wedge'. 

On Mon. Apr 23, the index attempted a pullback that faced twin resistances from the lower edge of the 'wedge' and the 50 day EMA. The index slipped down to close below the 'rising wedge' at Friday's closing level of 2670.

That was a signal for bears to attack. The index dropped sharply towards its 200 day EMA intra-day on Tue. Apr 24, before recovering to close at 2635. On Wed. Apr 25, the index dropped lower intra-day - testing support from its 200 day EMA - and bounced up to close slightly  higher at 2639.

The 'reversal day' bar (lower low, higher close) triggered a brief rally that faced strong resistance from the 50 day EMA. The index ended absolutely flat on a weekly closing basis.

Daily technical indicators are looking neutral to bearish, and are not showing any upward momentum. MACD is trying to rise above its signal line in bearish zone. RSI and Slow stochastic are at their respective 50% levels after brief dips into bearish zones.

The index has stayed above its 200 day EMA in bull territory for three straight weeks. But as long as it trades below 'GAP 1' and 'GAP 2', bears may continue to 'sell on rise' to retain their advantage.

On longer term weekly chart (not shown), the index formed a 'hanging man' candlestick and closed exactly at its 20 week EMA for the second week in a row, but above its 50 week and 200 week EMAs in a long-term bull market. Weekly MACD is falling below its signal line in bullish zone. RSI is in neutral zone. Slow stochastic has bounced up from the edge of its oversold zone but remains in bearish zone. 

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 tested resistance from the 7440 level on Tue. Apr 24 but failed to cross above it. Bears forced a temporary pullback to the 200 day EMA on Wed. Apr 25.

The index found strong support at its long-term average and rallied past 7440 and the psychological 7500 level on Fri. Apr 27 - gaining 1.8% on a weekly closing basis. 

By closing at 7502 - above the Fibonacci 61.8% retracement level of its entire 916 points fall (refer last week's post) - the index is on the verge of reversing the down trend from the Jan 12 top.

The 20 day EMA is about to cross above the 200 day EMA. The 'golden cross' of the 50 day EMA above the 200 day EMA will technically confirm a return to a bull market.

All three daily technical indicators are inside their overbought zones and showing upward momentum. The index rally is not over yet. However, some consolidation or correction will improve the technical 'health' of the chart. (At the time of writing this post, the index is trading 40 points higher.)

On longer term weekly chart (not shown), the index closed above its merged 20 week and 50 week EMAs, and well above its 200 week EMA in a long-term bull market. Weekly MACD and RSI are rising in bearish zones. Slow stochastic is in bullish zone.

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