The daily bar chart pattern of SPX 500 shows a dash for glory by bulls that got halted inside the Fibonacci resistance zone between 2640 and 2710 (which are the 50% and 61.8% retracement levels respectively of the correction from the Oct 3 top of 2940 to the Dec 26 low of 2347).
In a ‘V’ shaped counter-trend rally from its Dec 26 low, the index had broken out above its 50 day EMA on Jan 17. For the next 6 trading sessions, it consolidated sideways – receiving good support from its 50 day EMA.
On Thu. Jan 31, the index closed above its 200 day EMA in bull territory after 2 months, but bears were not yet ready to give up control. The index gained ~1.6% for the week, but failed to close above the resistance zone.
Daily technical indicators are looking bullish and overbought. MACD is rising above its signal line in overbought zone. RSI is above its 50% level, but its upward momentum has weakened. Slow stochastic is rising inside its overbought zone, but is showing negative divergence by touching a lower top.
Expect bears to put up a fight to defend the 61.8% Fibonacci retracement level (2710), which is treated as a trend-deciding level by many technical traders.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs after 4 months. Weekly MACD has just crossed above its signal line in bearish zone. RSI has managed to cross above its 50% level. Slow stochastic is rising towards its overbought zone.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 dropped to an intra-day low of 6734 on Mon. Jan 28 and closed below 6750. A smart recovery during the rest of the week propelled the index to a close above its 20 day and 50 day EMAs, and its previous (Jan 11) top of 7002.
The index gained more than 200 points (3.1%) on a weekly closing basis but remains well below its falling 200 day EMA in a bear market.
Daily technical indicators are looking bullish and showing upward momentum. MACD has crossed above its signal line in bullish zone. RSI is rising above its 50% level. Stochastic is rising inside its oversold zone, and can trigger a correction or some consolidation.
On longer term weekly chart (not shown), the index closed above its 20 week and 200 week EMAs, but below its 50 week EMA in long-term bull territory. Weekly technical indicators are turning bullish. MACD has crossed above its falling signal line inside its oversold zone. RSI is climbing towards its 50% level. Stochastic is rising towards its overbought zone.
Leave a Reply