S&P 500 and FTSE 100 charts (Mar 01, 2019): pullback rallies fail to overcome overhead resistances

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S&P 500 index chart pattern

The following comments were made in last week’s post on the daily bar chart pattern of S&P 500: Some more consolidation can be expected before the index makes an attempt to cross above the resistance zone.”

The index entered the resistance zone (between 2800 and 2825) On Mon. Feb 25 and touched an intra-day high of 2813, but dropped to close below 2800. Three days of consolidation with a downward bias followed, with the index touching an intra-day low of 2775 on Wed. Feb 27.

An upward bounce on Fri. Mar 1 – possibly because POTUS postponed increasing tariffs on Chinese goods – took the index to a close inside the resistance zone after 4 months, with a weekly gain of 0.4%.

Bears have managed to prevent the ‘golden cross’ of the 50 day EMA above the 200 day EMA for one more week by strongly defending the resistance zone. 

Daily technical indicators are looking overbought. MACD has slipped below its signal line (which appears to be forming a ’rounding top’ reversal pattern) near the edge of its overbought zone. RSI continues to face resistance from the edge of its overbought zone. Slow stochastic has bounced up from the edge of its overbought zone. 

The index has taken more than two months to recover from three weeks of sharp correction in Dec ’18. Some more consolidation is possible before the index can cross above the resistance zone. 

On longer term weekly chart (not shown), the index closed above its three weekly EMAs in a long-term bull market for the fifth week in a row, but has formed a long-legged doji candlestick pattern that can halt the rally

Weekly MACD has risen to its neutral zone. RSI is moving sideways above its 50% level. Slow stochastic is climbing inside its overbought zone, and can trigger a correction.

FTSE 100 index chart pattern

The daily bar chart pattern of FTSE 100 failed to overcome strong resistance from its 200 day EMA and corrected below its 20 day EMA. It touched the week’s low of 7041 on Thu. Feb 28, but found support from its 50 day EMA.

A weak technical bounce on Fri. Mar 1 faced resistance from the 20 day EMA. The index managed to close just above 7100, with a 1% loss on a weekly closing basis. 

It was the second straight lower weekly close. Strong volumes on the three down days is a clear sign of bear domination. 

Daily technical indicators are looking bearish after correcting overbought conditions. MACD has formed a ’rounding top’ reversal pattern and is falling below its signal line in bullish zone. RSI has dropped to seek support from its 50% level. Stochastic has emerged from its oversold zone. 

Uncertainty about a possible no-deal BrExit is affecting bullish sentiments. The index may consolidate some more. (At the time of writing this post, FTSE is trading about 16 points higher.)

On longer term weekly chart (not shown), the index closed above its 20 week and 200 week EMAs in long-term bull territory, but below its 50 week EMA. Weekly technical indicators are turning bearish. MACD is rising above its signal line in bearish zone. RSI has dropped to seek support from its 50% level. Stochastic has fallen down from its overbought zone.

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