S&P 500 and FTSE 100 charts (Jul 05, 2019): pause after touching new highs


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S&P 500 index chart pattern

The following comment appeared in last week’s post on the daily bar chart pattern of SPX 500: It is just a matter of time before bulls overcome bear resistance at the 2954 level.”

A holiday-shortened trading week started well for bulls. On Mon. Jul 1, the index formed an upward ‘gap’ and broke out above the resistance level of 2954. However, the upward breakout was not accompanied by a significant increase in volumes – keeping the door open for a pullback.

The index rose to touch a new high of 2996 on Jul 3, but faced profit booking and formed a bearish ‘hanging man’ candlestick on Fri. Jul 5 – closing slightly lower at 2990 with a 1.6% weekly gain.

Daily technical indicators are looking bullish and overbought. MACD is above its rising signal line inside its overbought zone. RSI has slipped down after briefly entering its overbought zone. Slow stochastic has re-entered its overbought zone. 

Note that the technical indicators are showing negative divergences by failing to touch new highs with the index. A pullback towards 2954 and/or some consolidation is likely. All three EMAs are rising, and the index is trading well above them in a bull market. 

On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull marketWeekly technical indicators are  looking bullish and overbought, and showing negative divergences by failing to touch new highs with the index.

FTSE 100 index chart pattern


The following comment appeared in last week’s post on the daily bar chart pattern of FTSE 100: Technical confirmation of the ‘cup and handle’ pattern is still awaited…”

By breaking out and closing above the previous (Apr 23) top of 7529 on Jul 2, formation of the ‘cup and handle’ pattern has been technically confirmed. Note that there was no significant increase in volumes during the upward breakout. 

As often happens to an upward breakout without volume support, the rally petered out after the index touched an intra-day high of 7622 on Jul 4. A pullback towards 7529 is in progress. Such pullbacks provide opportunities to add.

Daily technical indicators are in bullish zones but not showing any upward momentum. MACD is rising above its signal line, but its upward momentum has weakened. RSI and Stochastic have dropped from their respective overbought zones.

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in long-term bull territory for the fifth straight week. Weekly technical indicators are looking bullish. MACD has crossed above its signal line in bullish zone. RSI is rising above its 50% level. Stochastic has entered its overbought zone. Some consolidation or correction is possible.

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