The following comment appeared in last week's post on the daily bar chart pattern of S&P 500: "Slow stochastic has entered its overbought zone, and may trigger a pullback towards the 'Support/Resistance zone'."
On a holiday-shortened trading week, the index formed a small downward 'gap' of 2 points and dropped below the 'Support/Resistance zone' intra-day on Sep 5. It managed to bounce up and close just below 2460 (inside the 'Support/Resistance zone').
For the rest of the week, the index traded in a range between 2460 & 2470 but touched lower tops each day. The index closed above its three rising EMAs in a bull market, but lost 0.5% on a weekly closing basis.
Daily technical indicators are in bullish zones but giving conflicting signals. MACD is rising above its signal line. RSI is seeking support from its 50% level. Slow Stochastic has dropped from its overbought zone.
The index may be in the process of forming a 'diamond' pattern. A 'diamond' can be a reversal pattern or a continuation pattern. So, await the breakout before deciding to buy or sell.
An upward breakout above 2480 will be bullish. A downward breakout below 2440 will be bearish. The pattern is still forming, and may not turn out to be a 'diamond' at all - but forewarned is forearmed.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones. Only Slow stochastic is showing upward momentum.
FTSE 100 index chart pattern
The following comment appeared in last week's post on the daily bar chart pattern of FTSE 100: "... a convincing move above the Aug 8 '17 top of 7552 is required if bulls are to regain control of the chart."
The index failed to build on its previous week's bullishness as resistance from the (purple) down trend line proved to be too strong.
After falling below its 20 day and 50 day EMAs to an intra-day low of 7322 on Sep 6, the index ended the week with a loss of 0.8% on a weekly closing basis.
FTSE is still trading above its rising 200 day EMA in a bull market, but the formation of a large bearish 'descending triangle' pattern should be a red flag for bulls.
Daily technical indicators are not showing any upward momentum. MACD and RSI are in bearish zones. Slow stochastic is seeking support from its 50% level.
A likely downward breakout below 7300 can lead to a test of support from, or even a breach of, the 200 day EMA.
On longer term weekly chart (not shown), the index closed at its 20 week EMA, and above its rising 50 week and 200 week EMAs in a long-term bull market. Weekly MACD is sliding below its falling signal line in bullish zone. RSI has bounced up a bit after receiving support from its 50% level. Slow stochastic is in bearish zone but showing some upward momentum.
This post first appeared on Stock Market Charts | India Mutual Funds Investmen, please read the originial post: here
