S&P 500 and FTSE 100 charts (Oct 12, 2018): bears force bulls on the ropes


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S&P 500 index chart pattern

Possibility of some more correction was mentioned in last week’s post on the daily bar chart pattern of S&P 500. Yet, the vicious bear attack on Wed. & Thu. (Oct 10 & 11) seemed to catch bulls unawares.

The index fell vertically to close below its 200 day EMA for the first time in 6 months. By touching an intra-day low of 2710 on Oct 11, the index dropped into the support zone between 2737 and 2689 (which are the 50% and 61.8% Fibonacci retracement levels respectively of the 408 points rally from the Feb 9 low of 2533 to the Sep 21 top of 2941).

Volume spikes on Wed. & Thu. may be the sign of a ‘selling climax’. On Fri. Oct 12, the index bounced up to close above its 200 day EMA in bull territory. In the process, it formed an ‘inside day’ as well as a ‘hammer’ candlestick pattern. Bulls appear to be ready for a fight back.

Daily technical indicators are looking oversold. MACD and Slow stochastic are falling deeper inside their respective oversold zones. RSI is trying to emerge from its oversold zone, and can trigger a pullback towards the 2800-2850 zone. 

On longer term weekly chart (not shown), the index fell below its 50 week EMA intra-week for the first time since Apr ’18, but closed above its 50 week and 200 week EMAs in a long-term bull market. Weekly technical indicators are showing downward momentum. MACD and Slow stochastic are falling in bullish zones. RSI has dropped below its 50% level.  

FTSE 100 index chart pattern


The bottom seems to be falling out of the daily bar chart pattern of FTSE 100. Bulls were helpless against aggressive bears, as the index closed more than 320 points (4.4%) lower for the week.

All three EMAs are falling, and the index is trading below them in a bear market. A test of the Mar ’18 low is on the cards. (At the time of writing this post, the index is correcting further.)

Daily technical indicators are looking oversold. MACD and RSI are falling deeper inside their oversold zones. Stochastic has stopped falling, and can trigger a technical bounce.

On longer term weekly chart (not shown), the index closed below its three weekly EMAs in long-term bear territory. Weekly technical indicators are looking bearish and showing downward momentum. MACD and RSI are falling towards their respective oversold zones. Stochastic is inside its oversold zone.

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