Monday, May 21, 2018

S&P 500 and FTSE 100 charts (May 18, 2018): bulls struggle in one, take control in another

S&P 500 index chart pattern

The following comments appeared in last week's post on the daily bar chart pattern of S&P 500"The bulls still have a lot of work left, as 'GAP 2' is likely to provide resistance. The index appears to be consolidating within a bearish 'Flag' pattern whose upper edge can also provide resistance."

The index touched an intra-day high of 2742 on Mon. May 14 - only to face twin resistances from 'GAP 2' and the upper edge of the bearish 'Flag' pattern. As expected, the index pulled back to the down trend line (refer last week's post).

The rest of the week was spent in sideways consolidation within the 'Flag' but above the three EMAs in bull territory. Volumes were stronger on the three down days last week. Bears may force the index to retreat towards its 200 day EMA.

Daily technical indicators are in bullish zones, but not showing any upward momentum. Bulls are struggling to retain control of the chart, whose long-term structure remains bullish. Bears are not making their life easy.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market, but formed a 'reversal' bar (higher high, lower close). Weekly technical indicators are in bullish zones but only Slow stochastic is showing upward momentum.

FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 consolidated sideways during the first three days of the week before making a dash to conquer its lifetime high of 7793 (touched on Jan 12).

Bears put up a strong defense and forced the bulls to retreat temporarily. (At the time of writing this post, the index has crossed its previous top with an upward 'gap' and is trading at a new lifetime high.)

All three EMAs are rising and the index is trading well above them in a bull market. The 'golden cross' of the 50 day EMA above the 200 day EMA (marked by blue circle) had technically confirmed a return to a bull market in the previous week. 

Daily technical indicators are looking quite overbought, and can trigger some correction or consolidation.

On longer term weekly chart (not shown), the index closed well above its three weekly EMAs in a long-term bull market. Weekly MACD and RSI are rising in bullish zonesSlow stochastic is well inside its overbought zone and can trigger a correction or consolidation.

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