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Note the following comment in last week’s post on the daily bar chart pattern of SPX 500: “Friday’s ‘outside day’ candlestick may be hinting at a continuation of the down trend that started after the index touched its lifetime high of 2954 on May 1.”
On Mon. May 13, the index dropped to test support from the 2800 level, and closed below its 50 day EMA. A technical bounce followed during the next three days. The index breached the 20 day EMA intra-day on Thu. May 16, but failed to close above it.
Bears came to the fore on Fri. May 17. The index dropped below its 50 day EMA intra-day, but managed to close just above it.
The index remains in a down trend (marked by purple trend line) that started after the index touched a lifetime high of 2954 on May 1.
Daily technical indicators are in bearish zones. MACD is moving sideways below its falling signal line. RSI has dropped down after facing resistance from its 50% level. Slow stochastic has bounced up from the edge of its oversold zone.
Some consolidation or more correction can be expected.
On longer term weekly chart (not shown), the index dropped below its 20 week EMA, but bounced up to close above its three weekly EMAs in a long-term bull market. Weekly technical indicators are in bullish zones, but showing downward momentum.
FTSE 100 index chart pattern
Note the following comments in last week’s post on the daily bar chart pattern of FTSE 100: “The ‘cup and handle’ pattern has not been negated yet. Daily technical indicators are looking bearish and oversold…and can trigger a technical bounce.”
On Mon. May 13, the index touched a low of 7151 and closed below its three EMAs in bear territory at 7164. A technical bounce during the next three days propelled the index to a close above its three EMAs and the 7350 level on Thu. May 16.
On Fri. May 17, the index closed just below 7350 but above its three EMAs in bull territory. However, formation of a small ‘hanging man’ candlestick can lead to some correction or consolidation.
Daily technical indicators are looking bullish after correcting oversold conditions. MACD is about to cross above its falling signal line in bearish zone. RSI and Stochastic have moved above their respective 50% levels.
A convincing move above the Apr 23 top of 7529 is necessary to complete the ‘cup and handle’ pattern.
On longer term weekly chart (not shown), the index formed a ‘reversal’ bar (lower low, higher close) and closed above its three weekly EMAs in long-term bull territory. Weekly technical indicators are in bullish zones, and showing slight upward momentum.
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