S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 rose to touch a new high of 2588 on Fri. Nov 3. All three EMAs are rising, and the index is trading above them in a bull market.
Bulls used a brief intra-day drop to the 20 day EMA on Oct 25 '17 to buy. They have successfully used the 'buy the dips' strategy for the past couple of months.
The trading pattern from Oct 23 onwards has formed a bearish 'rising wedge' pattern - from which a downward breakout is likely.
Daily technical indicators are looking overbought, and showing negative divergences by touching lower tops while the index touched a new high.
The combination of a bearish pattern at an index top and negative divergences on technical indicators should be treated with caution. A quick 2-3% correction - like the one that occurred in Aug '17 - is a possibility.
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 are looking overbought, and can trigger a correction.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 dropped sharply below its 20 day EMA and the (purple) down trend line on Oct 25 '17, but bounced up after finding good support from its 50 day EMA.
The index touched an intra-day high of 7581 on Fri. Nov 3, and is trading above its three EMAs in a bull market. However, it continues to struggle to close convincingly above its Aug 8 top of 7552.
Daily technical indicators are looking bullish, but showing negative divergences by touching lower tops while the index touched a higher top. Some correction or consolidation can follow.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market. Weekly RSI and Slow stochastic are moving sideways. Weekly MACD is rising above its signal line in bullish zone. The entire trading from Apr '17 onwards may be forming a bullish 'ascending triangle' pattern.
FIIs were net sellers of equity worth Rs 33.6 Billion for the week. DIIs were net buyers of equity worth Rs 38.3 Billion, as per provisional figures. Sensex gained 1.8% and Nifty gained 1.5% on weekly closing basis.
WPI inflation rose to a 4 month high of 3.24% in Aug '17, against 1.88% in Jul '17 and 1.09% in Aug '16 as prices of vegetables soared.
India's exports grew 10.29% while imports grew 21% in Aug '17. The trade deficit widened to $11.64 Billion against $7.7 Billion in Aug '16 - mainly due to higher oil and gold imports.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex gained nearly 600 points for the week as bulls tried to regain control of the chart. The index is trading above its three rising EMAs in a bull market.
The 20 day EMA and the MACD signal line are forming bullish 'saucer' patterns, but bears have not been routed yet.
Sensex is more than 400 points below its lifetime high of 32686 (touched on Aug 2). After breaking out above a bearish 'rising wedge' pattern (refer last week's post), the index is consolidating within a bearish 'flag' pattern.
Daily technical indicators are in bullish zones, but sending conflicting signals. MACD is rising above its signal line. ROC has dropped to seek support from its 10 day MA. RSI is retreating after facing resistance from the edge of its overbought zone. Slow stochastic is moving sideways inside overbought zone.
Some more consolidation within the 'flag' and a breakout below it are possibilities. Note that FIIs were net buyers of equity on Fri. Sep 15. If they continue buying, the scales will tip towards bulls.
Stay invested. Remain cautiously optimistic.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty moved above the 'rising wedge' pattern formed during the previous 4 weeks, but faced resistance from the lifetime high level of 10138 (touched in the week ending on Aug 4 '17).
The past 7 weeks' trading appears to have formed an 'ascending triangle' pattern from which the likely break out is upwards.
Note that the index is in the process of forming either a continuation or a reversal pattern. Just as a bearish 'rising wedge' turned into a bullish 'ascending triangle', the pattern may further evolve to form a 'rectangle' or a 'broadening top' pattern.
The index is trading above its two rising weekly EMAs in a bull market. Bulls will regain control only after a convincing move above the lifetime high of 10138. That hasn't occurred yet.
Weekly technical indicators are looking overbought. MACD is moving sideways below its signal line inside overbought zone. ROC has merged with its 10 week MA and moving sideways below its overbought zone. RSI is rising towards its overbought zone. Slow stochastic is about to enter its overbought zone.
Nifty's TTM P/E is now at 26.24 - way higher than its long-term average. The breadth indicator NSE TRIN (not shown) is oscillating near the edge of its overbought zone and can limit index upside.
Bottomline? Sensex and Nifty charts have been consolidating sideways with upward biases for the past 5 weeks. DII buying seems to have negated the
earlier bearishness. FIIs are still selling. Inflation and the trade deficit are rising. The low Jul '17 IIP number shows that manufacturing growth remains muted. So, caution is advised.
FIIs were net buyers of equity on Tue. & Thu., but net sellers on the other three days of the week. DIIs were net sellers of equity on Tue. & Thu., but net buyers on the other three days.
For the week as a whole, both were net buyers of equity - worth Rs 14.9 Billion and Rs 9 Billion respectively. Sensex gained 0.9% and Nifty gained 1% on weekly closing basis. Both indices touched new highs.
As per RBI, India's foreign exchange reserves rose $2.2 Billion to a record high of $391.3 Billion for the week ended July 21.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex had broken out above an 'ascending triangle' pattern on Jul 10. It consolidated sideways for the next 9 trading sessions while trading above its three rising EMAs in a bull market.
On Mon. Jul 24, the index broke out above the consolidation range with good volume support, and rallied to touch a new high of 32673 on Thu. Jul 27 - meeting the upward target mentioned in an earlier post.
Negative divergences visible on daily ROC, RSI and Slow stochastic indicators led to some profit booking, with the index closing just above 32300.
Note that Slow stochastic has formed a 'double top' reversal pattern inside its overbought zone. Some more correction or consolidation is possible.
With FIIs and DIIs in 'buy mode', any correction/consolidation is likely to be shallow and of short duration.
An escalation of the border skirmish with China can be a 'Black Swan' event. So far, India has stood firm against severe provocation.
Stay invested. Remain cautiously optimistic. This is not the time to dive into the market.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty rose to touch a new high of 10115 on the back of a sharp increase in volumes - meeting the upward target mentioned in last week's post.
The index closed above the 10000 level for the first time ever, and is trading above its two rising weekly EMAs in a bull market. However, overbought technical conditions may trigger some correction or consolidation.
All four weekly technical indicators are inside their respective overbought zones. ROC and Slow stochastic are showing negative divergences by failing to touch new highs with the index. (Note that the weekly indicators have remained overbought for the past 6 months.)
Nifty's TTM P/E has increased to 25.56 - much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is deep inside its overbought zone.
Bottomline? Sensex and Nifty charts touched new highs - meeting their respective upward targets following breakouts above 'ascending triangle' patterns. Both FIIs and DIIs were net buyers. Index levels climbed despite technically overbought conditions. Stay invested.
FIIs were in profit-booking mood during the first three days of trading this week. Their net selling in equities was worth Rs 1.6 Billion.
DIIs turned bulls. Their net buying in equities was worth Rs 11.4 Billion, as per provisional figures. Nifty closed above the psychological level of 10000 for the first time ever.
Foreign Direct Investment (FDI) inflows increased 23% to $10.02 Billion during Apr-May '17 against $8.12 Billion during Apr-May '16 - thanks to a more investor-friendly policy.
On Mon. Jul 24, the daily bar chart pattern of Nifty broke out above the 150 points (9780-9930) range within which it was consolidating after breaking out above an 'ascending triangle' pattern on Jul 10.
On Tue. Jul 25, the index breached the 10000 level intra-day but could not sustain above the psychological level. Strong buying by DIIs ensured a close above the 10000 level today.
All three EMAs are rising, and the index is trading above them in a bull market. However, daily technical indicators are looking overbought, and two of them - RSI, Slow stochastic - are showing negative divergences by touching lower tops.
The index is more than 900 points above its 200 day EMA. Nifty's TTM P/E is at 25.57 - considerably higher than its long-term average. The breadth indicator NSE TRIN (not shown) has fallen deep inside its overbought zone.
These technically overbought signals can lead to a corrective move. Whether it will be a correction or some more consolidation will depend on the stance that FIIs take.
Thursday's F&O expiry may induce some more profit booking by FIIs. Stay invested. Keep a 'buy list' ready. If and when you find compelling value, accumulate slowly.
FIIs increased their buying in equity shares during the week. Their total net buying was worth Rs 18.6 Billion. DIIs turned net sellers of equity - worth Rs 12.9 Billion - as per provisional figures.
Sensex closed nearly flat - gaining just 8 points for the week. Nifty gained 29 points (0.3%) on a weekly closing basis. Both indices pulled back towards their respective 'ascending triangle' patterns from which they broke out in the previous week.
Reliance pulled a couple of rabbits out of its hat - surprisingly good Q1 (Jun '17) results and a 1:1 bonus announcement that forced bears to cover their shorts.
About 140 FPIs (foreign portfolio investors) registered with SEBI in Apr '17, indicating that India remains an attractive investment destination. The total number of FPIs with SEBI approval increased to 7947.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex consolidated sideways after breaking out above an 'ascending triangle' pattern in the previous week.
The index touched a new high of 32132 on Mon. Jul 17, followed by a sharp pullback towards the top of the 'triangle' the next day. (The possibility of such a pullback was mentioned in last week's post.)
The rising 20 day EMA provided good support to the index, which bounced up to close above the 32000 level for the second week in a row.
Daily technical indicators have corrected overbought conditions but remain close to the edges of their respective overbought zones.
Some more consolidation is likely as the stock market tries to 'digest' Q1 (Jun '17) results.
All three EMAs are rising, and the index is trading above them in a bull market. Dips can be used to add/enter. Look for opportunities in individual stocks that declare good results.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty pulled back towards the top of the 'ascending triangle' pattern from which it had broken out in the previous week.
Bulls bought the dip. The index recovered to close above the 9900 level for the first time ever, but formed a 'hanging man' candlestick pattern which has bearish implications.
Weekly technical indicators are inside their respective overbought zones. ROC is showing negative divergence by touching a lower top while the index rose higher.
Nifty's TTM P/E is at 25.32 - way higher than its long-term average. The breadth indicator NSE TRIN (not shown) is inside its overbought zone.
Expect some consolidation around current levels before the index gathers strength to climb to the psychological level of 10000. The technical upward target - equal to the height of the 'triangle' from the breakout point from the 'ascending triangle' - is about 10075.
Bottomline? Sensex and Nifty charts are consolidating after breaking out above 'ascending triangle' patterns. With FIIs in buying mode, higher index levels are likely despite technically overbought conditions. Stay invested.
FIIs were net buyers of equity worth Rs 16.9 Billion during the first three days of trading this week. DIIs were net sellers of equity worth Rs 14.3 Billion, as per provisional figures.
The index closed above the 9900 level for the first time on Mon. Jul 17. But bulls were stopped in their tracks as the GST Council raised the cess on cigarettes.
Nifty lost more than 120 points on Tuesday as bears battered the stock of ITC - which has a large weightage on the index.
The daily bar chart pattern of Nifty has been consolidating sideways within a 150 points range (between 9780 and 9930) after breaking out above a bullish 'ascending triangle' pattern on Mon. Jul 10.
All three EMAs are rising, and the index is trading above them in a bull market. The distance between the index and its 200 day EMA is more than 850 points, which indicates overbought condition as per empirical observations.
Daily technical indicators are also looking overbought. Nifty's TTM P/E is at 25.28 - much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has fallen deep inside its overbought zone.
With all these technical signals flashing red, what should small investors do? Remember that indices (and stocks) can remain overbought for long periods. That doesn't mean it will be a straight-line rise to new highs.
Leo Puri, MD of UTI Asset Management, said in a recent TV interview: "There is a large space between the two extremes of greed and fear." Learn to become comfortable in that space.
If you have spent the time and effort in creating a good financial plan and an Asset Allocation plan, then there is nothing to worry about. Just stick to the plans regardless of index gyrations.
If you have been buying and selling willy-nilly based on tips or friendly advice, you may be in big trouble already. The best way to get out of trouble is not to 'average' but to get out of losing positions.
Avoid taking large positions on the long or the short side. Remember the story of the hare and the tortoise. Investing is a marathon, not a sprint. You need to have a plan and pace yourself along the way.
(Note: Thinking of adding quality mid-cap and small-cap stocks to your portfolio? Subscribe to my Monthly Investment Newsletter. Paid subscriptions are being offered to blog visitors, followers and subscribers for 2 more days only - till Jul 21, 2017. Contact me at mobugobu@yahoo.com for details.)
FIIs and DIIs were both net buyers of equity during the week - worth Rs 12.6 Billion and Rs 10.4 Billion respectively, as per provisional figures. Sensex and Nifty rose to touch their highest ever levels - each gaining more than 2% on weekly closing basis.
India's WPI inflation eased to 0.9% in Jun '17 - its lowest level in 8 months - against 2.17% in May '17 and -0.1% in Jun '16. Pressure will now mount on RBI to reduce interest rates in its Aug '17 policy meeting.
India's exports grew 4.4% in Jun '17 to $23.56 Billion; imports grew 19% to $36.52 Billion. Trade deficit was lower at $12.96 Billion against $13.84 Billion in May '17, but much higher than deficit of $8.11 Billion in Jun '16.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex broke out above the 'ascending triangle' pattern within which it was consolidating since May 24 '17, and rose to touch new intra-day and closing highs above the 32000 level.
The index is trading above its three rising EMAs in a bull market. The breakout from the 'ascending triangle' (the possibility was mentioned in last week's post) has an upward target of about 32670.
Daily technical indicators are looking overbought. Though an index can remain overbought for long periods (check the Jan-Mar '17 period), the possibility of a pullback towards the top of the 'triangle' can't be ruled out.
Recent SEBI strictures on use of P-Notes may have triggered short-covering by FIIs - which may continue during the next couple of weeks.
Initial Q1 (Jun '17) results show no great improvement in earnings by India Inc. It may take another couple of quarters before earnings start to catch up with Sensex valuation.
Stock markets have a tendency to 'discount' good news in advance. So, waiting for a big correction to invest may not be a good idea. A correction usually happens when it is least expected. Maintaining SIPs and looking for pockets of fair valuation can work better.
NSE Nifty index chart pattern
The following remark was made in last week's post on the weekly bar chart pattern of Nifty: "For the past 7 weeks, the index has been consolidating sideways - forming a possible 'ascending triangle' pattern from which the likely breakout is upwards."
Note that a 'symmetrical triangle' is often an unreliable pattern because a breakout can occur in either direction. But an 'ascending triangle' is more reliable because a price breakout typically occurs above the pattern.
Likewise for a 'descending triangle' pattern, where the breakout occurs below the pattern. Being able to identify these 'triangle' patterns can be very useful as the breakouts can be triggers for entering (or exiting).
Weekly technical indicators are inside their respective overbought zones and showing negative divergences by failing to touch new highs with the index. (On the daily chart, Nifty has formed a bearish 'hanging man' candlestick pattern.) A pullback towards the top of the 'triangle' is a possibility.
Nifty's TTM P/E has moved above 25 - much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has dropped back into its overbought zone - which may limit index upside.
Bottomline? Sensex and Nifty charts rose to touch new lifetime highs on the back of combined buying by FIIs and DIIs. Caution is advised. Stay invested. Check Q1 (Jun '17) results to add good performers to your 'buy list'.
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In a change of strategy, FIIs turned net buyers of equity on all three days of this trading week. As per provisional figures, their total net buying was worth Rs 6.5 Billion.
DIIs were also net buyers of equity on the first two days of trading this week, which exceeded their net selling today. Their total net buying was worth Rs 9 Billion. The index closed today above the 9800 level for the first time ever.
CPI inflation declined to 1.54% in Jun '17 - its lowest level in 5 years - against 2.1% in May '17, on the back of lower food prices. The IIP number for May '17 slipped to 1.7% against a downwardly revised 2.7% in Apr '17 - raising hopes that RBI may reduce interest rates to give a boost to the shrinking industrial sector.
The following remarks appeared in last week's technical update on the daily bar chart pattern of Nifty: "Nifty may be forming an 'ascending triangle' pattern from which the likely breakout is upwards. Some more consolidation within the 'triangle' is likely before the index can rise to a new high."
Combined FII and DII buying triggered the upward breakout from the 'ascending triangle' pattern on Mon. Jul 10. However, a technical glitch at NSE considerably reduced trading hours that led to much lower trading volumes.
The index touched a lifetime intra-day high of 9830 on Tue. Jul 11 and a lifetime closing high of 9816 today. Note that all three daily technical indicators failed to touch new highs with the index.
The negative divergences can lead to a pullback to the top of the 'triangle'. It will provide an entry opportunity to those who may have missed buying on the breakout.
The index is trading above its three rising EMAs in a bull market, but it is more than 800 points above its 200 day EMA - which indicates overbought condition as per empirical observations.
Daily technical indicators have entered their respective overbought zones. Nifty's TTM P/E is almost at 25 - way higher than its long-term average. The breadth indicator NSE TRIN (not shown) has emerged from its overbought zone but showing a bit of downward momentum in neutral zone.
With FIIs back in buying mode, the index may move higher despite overbought technical conditions. Stay invested. Check Q1 (Jun '17) results to identify the better performing companies. Use the rally to get rid of non-performers in your portfolios.
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FIIs were net sellers of equity worth Rs 19.5 Billion during the week. DIIs were net buyers of equity worth Rs 23.6 Billion, as per provisional figures.
Sensex and Nifty gained 1.4% and 1.5% respectively on a weekly closing basis, and are within handshaking distances of their lifetime highs.
Concerns regarding GST implementation are gradually dissipating. Over the medium to long-term, market share is expected to shift away from unorganised players (mainly micro, small and medium enterprises) to organised sectors.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex shows the effect of a week of strong buying by DIIs.
The index bounced up after receiving good support from its 50 day EMA, and rose to touch an intra-day high of 31461 (just 0.2% lower than its Jun 22 top) and a lifetime closing high of 31369 on Thu. Jul 6
By touching a higher bottom of 30681 on Jun 30, the index may be in the process of forming an 'ascending triangle' pattern, from which the likely breakout is upwards.
Daily technical indicators are in bullish zones, but only Slow stochastic is showing any upward momentum. All four are showing negative divergences (marked by blue arrows).
Some more consolidation within the 'triangle' is possible before the index eventually breaks out.
Remember that an upward breakout will be technically valid if accompanied by a volume surge. Without volume support, the likely breakout may be followed by a pullback towards the top of the 'triangle'.
Stay invested. Await Q1 (Jun '17) results to decide the next course of action.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty rose to test resistance from the 9700 level before closing just 2 points lower than its lifetime closing high of 9668 (in the week ending on Jun 9).
For the past 7 weeks, the index has been consolidating sideways - forming a possible 'ascending triangle' pattern from which the likely breakout is upwards.
Weekly technical indicators are in bullish zones and looking overbought. Three of them are showing negative divergences (marked by blue arrows) by failing to touch higher bottoms with the index.
Nifty's TTM P/E has moved up to 24.6 - much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has dropped back inside its overbought zone after briefly emerging from it.
Some more consolidation around current levels is a possibility before the index can break out.
Bottomline? Sensex and Nifty charts are consolidating sideways near lifetime highs. Some more consolidation is likely. Stay invested. Await Q1 (Jun '17) results - to be announced from next week onwards.
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Gold chart pattern
In the previous post on the daily bar chart pattern of Gold, the possibility of a breakout above 1280 and resistance from the zone between 1290 and 1310 was mentioned.
On Nov 1, gold's price did breakout above 1280 but faced resistance from 1290. The next day, gold's price spurted to 1310 but couldn't move higher. During the next two days, 1310 continued to provide strong resistance.
On Nov 7, bear selling caused gold's price to pull back to the 1280 level, before dropping further towards its 200 day EMA on Nov 8.
Trump's unexpected victory in the US Presidential elections caused strong volatility on Nov 9. Gold's price spiked up to 1340 intra-day with a huge volume surge, only to drop and close near its 200 day EMA.
As the US Dollar strengthened against a basket of global currencies, more selling by bears pushed gold's price below its 200 day EMA into bear territory, and then down to 1210 - followed by a brief recovery.
The possibility of the formation of a bearish 'flag' pattern and a subsequent price drop below 1220 was also mentioned in the previous post.
Though a 'flag' pattern didn't get formed, the chart structure was looking quite bearish despite the formation of a bullish 'ascending triangle' pattern.
Daily technical indicators are looking oversold. Any technical bounce towards 1250 may provide another selling opportunity to bears.
On longer term weekly chart (not shown), gold’s price formed a large 'reversal week' bar (higher high, lower close) and closed below its three weekly EMAs in a long-term bear market. The 50 week EMA failed to cross above the 200 week EMA. Weekly technical indicators are in bearish zones.
Silver chart pattern
The daily bar chart pattern of Silver broke out above a small 'ascending triangle' pattern on Nov 1 and entered bull territory above its three EMAs.
After facing some resistance from the zone between 18.50 and 18.75, silver's price dropped below its 50 day EMA but received good support from its 20 day EMA.
On Nov 8, silver's price re-entered bull territory above its three EMAs and rose to touch the 19 level the next day.
After failing to overcome resistance from the 19 level on Nov 9 & 10, silver's price crashed below its three EMAs into bear territory on Nov 11 and dropped further on Nov 14.
All three daily technical indicators are in bearish zones and showing downward momentum - hinting at some more correction.
Note that both RSI ('double top') and Slow stochastic ('head and shoulder') formed reversal patterns in bullish zones that triggered the sharp corrections.
On longer term weekly chart (not shown), silver’s price has closed well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are looking bearish and showing downward momentum.
Gold chart pattern
The following comments appeared in the previous post on the daily bar chart pattern of Gold: "All three daily technical indicators are in their respective oversold zones. An upward bounce may occur at any time."
After an initial bounce that faced resistance from the 200 day EMA, gold's price rose gradually above its falling 20 day EMA but couldn't overcome resistance from the 1280 level.
In the process, a small 'ascending triangle' pattern appears to have formed - from which an upward breakout (above 1280) is likely. The zone between 1290 and 1310 is expected to provide resistance to a further up move.
All three daily technical indicators are showing upward momentum. MACD is rising above its signal line inside negative zone. RSI is facing resistance from its 50% level while Slow stochastic is facing resistance from the edge of its overbought zone.
It is quite possible that what is looking like an 'ascending triangle' may evolve into a bearish 'flag' pattern - in which case, gold's price can drop below 1220. Let the pattern play out fully before deciding to buy or sell.
On longer term weekly chart (not shown), gold’s price has moved up to close above its 50 week and 200 week EMAs in bull territory. However, the 'golden cross' of the 50 week EMA above the 200 week EMA is still awaited. Weekly technical indicators are looking bearish.
Silver chart pattern
The daily bar chart pattern of Silver has made a gradual recovery from bear territory by moving above the 17.50 level and the 200 day EMA, but is facing resistance from the falling 20 day EMA.
Silver's price appears to have formed a small 'ascending triangle' pattern from which an upward breakout (above 18) can occur. Expect strong resistance from the zone between 18.25 and 18.50 and the falling 50 day EMA.
Daily technical indicators are showing some upward momentum, but MACD and RSI are still in bearish zones.
The chart structure suggests that there is a good chance that what is looking like an 'ascending triangle' may actually turn out to be a bearish 'flag' pattern.
In which case, silver's price can fall to 16. So, caution is advised. Let the pattern play out before jumping in to buy/sell.
On longer term weekly chart (not shown), silver’s price has moved up to close above its 50 week EMA, but is trading well below its 20 week and 200 week EMAs in a long-term bear market. Weekly technical indicators are looking bearish.
S&P 500 index chart pattern
The following comments were made in the previous post on the daily bar chart pattern of S&P 500: "Daily technical indicators are in neutral zones, and showing a bit of downward momentum. Some more consolidation, or a correction towards the 2120 level can be expected."
The index dropped below the 2120 level intra-day on Thu. but bounced up to close inside the 'descending triangle' pattern within which it has been consolidating for the past 8 weeks.
The 20 day EMA has crossed below the 50 day EMA, and the index is trading below them. However, the 200 day EMA is still rising - keeping bullish hopes alive.
Higher volumes on recent down-days indicate bears have the stronger hand. All three daily technical indicators are in bearish zones but are showing positive divergences by failing to touch lower bottoms with the index.
An upward bounce towards the blue down trend line is a possibility. Bears are likely to use the opportunity to sell again.
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 for the 32nd week in a row. The index may be correcting after forming a bearish 'rounding top' pattern. Weekly technical indicators are still in bullish zones but showing downward momentum.
FTSE 100 index chart pattern
The following comments appeared in last week's post on the daily bar chart pattern of FTSE 100: "Daily technical indicators are in bullish zones, but their upward momentum have stalled. Expect some consolidation, and a possible pullback towards the top of the 'ascending triangle' before the index attempts to touch a new high."
Both the expected index movements occurred, but in reverse order. The index rose to touch a new lifetime high of 7130 on Tue. Oct 11 - only to form a 'reversal day' pattern (higher high, lower close) and pulled back to the top of the 'ascending triangle' pattern on Thu.
The index bounced up after receiving good support from its rising 20 day EMA, but closed about 0.5% lower for the week. All three daily technical indicators are in bullish zones but showing a bit of downward momentum.
Expect some consolidation or a correction before bulls can resume control.
On longer term weekly chart (not shown), the index formed a weekly 'reversal bar' (higher high, lower close) but closed above its three weekly EMAs in a long-term bull market for the 16th week in a row. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index.
S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 appears to have lost its sense of direction. The index consolidated within a 22 points range, as it oscillated about its 20 day and 50 day EMAs, and closed 15 points lower for the week.
The index is trading above its rising 200 day EMA in bull territory, but may be forming a bearish 'descending triangle' pattern from which the likely breakout is downwards.
Daily technical indicators are in neutral zones, and showing a bit of downward momentum. Some more consolidation, or a correction towards the 2120 level can be expected.
A convincing breakout above the blue down trend line will negate the near-term bearishness. The current technical signals are not conducive for such an upward breakout.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market for the 31st week in a row. The index may be forming a 'symmetrical triangle' pattern, from which a breakout can occur in either direction. Weekly technical indicators are in bullish zones but showing slight downward momentum.
FTSE 100 index chart pattern
The following comment was made in last week's post on the daily bar chart pattern of FTSE 100: ".. .a bullish 'ascending triangle' pattern may be forming - from which an upward break out above 6940 is likely."
The index broke out above the 'ascending triangle' on Oct 3, and touched a new 52 week high of 7122 the next day - testing its Apr '15 high of 7123. It consolidated sideways for the rest of the week, closing with a gain of 2.1% for the week.
A sharp fall in the exchange rate of the UK Pound against the US Dollar triggered the upward breakout. All three EMAs are rising, and the index is trading above them in a bull market.
Daily technical indicators are in bullish zones, but their upward momentum have stalled. Expect some consolidation, and a possible pullback towards the top of the 'ascending triangle' before the index attempts to touch a new high.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the 15th week in a row. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs with the index. A correction may be in the offing.
S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 continued its sideways consolidation within the support level of 2120 and the blue down trend line - oscillating about its converging 20 day and 50 day EMAs.
The following warning bell was sounded in last week's post: "The longer the index consolidates between 2120 and the blue down trend line, the more bearish will become the technical set up. Why? Because a bearish 'descending triangle' pattern will then get formed near a lifetime high. That could very well be a trend reversal pattern."
The index is above its three EMAs in bull territory, and closed marginally higher for the week. Friday's strong volumes may be a hint that bulls are gathering strength to cross above the hurdle of the blue down trend line soon.
Daily technical indicators are not looking very bullish. MACD is gradually rising above its signal line, but remains in negative zone. RSI is in neutral zone, trying to cling on to its 50% level. Slow stochastic is rising towards its overbought zone - from where it has been beating hasty retreats.
Some more consolidation is likely before the index decides to break out. Since the chart structure is bullish, the break out is expected to be upwards. But the formation of a bearish 'descending triangle' pattern should be observed closely.
On longer term weekly chart (not shown), the index traded above its three rising weekly EMAs in a long-term bull market for the 30th week in a row. Weekly technical indicators are in bullish zones after correcting overbought conditions.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 rose to touch an intra-day high of 6941 on Thu. Sep 29 - its highest level in Sep '16 - but failed to cross above its Aug '16 top of 6955.
The index closed just below the 6900 level, losing 10 points for the week. However, a bullish 'ascending triangle' pattern may be forming - from which an upward break out above 6940 is likely.
All three daily technical indicators are in bullish zones. But MACD and RSI are not showing much upward momentum. Slow stochastic has re-entered its overbought zone.
Some sideways consolidation can be expected before the index can break out.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the 14th week in a row. Weekly MACD and Slow stochastic are inside their respective overbought zones. RSI a little below its overbought zone.
