The ShareScope ScreenShot below shows the FTSE100 Daily Candlesticks for roughly the last year.
First thing to notice is where my Big Red Arrow is pointing to the Red Downtrend Line - this is dominating this chart and acting as huge Resistance to the Price moving higher.
My Green Arrow is pointing to a ‘Doji’ Candle which was generated on Friday after a Red Down Candle from Thursday. It would have been expected (by me anyway !!) that the FTSE100 would have dropped more on Friday because the Setup was there - but in reality Friday was a day of uncertainty where neither the Bulls or the Bears were really in command. This hints that maybe the Market will not fall further in coming days, but there are other Charts which conflict with this and the Oil Price looks weak as we will see later - obviously a falling Oil Price could drag the FTSE100 down as several of the largest FTSE100 Stocks are Oil Companies (RDSB, BP. etc.).
Note my Green Arrow also points to the Blue Wavy Line which is the 50 Day Moving Average - it is possible that the FTSE100 finds Support here. Note however that the 50 and the 200 Day Moving Averages are both falling - this is not good.
6030 is clearly Resistance that needs to be got over soon.
You can see this on earlier Charts as well, but note how the 50 Day Moving Average (the Darker Blue Wavy Line) has acted as a Level where the Price has moved up to and fallen away from for many many Months - often it overshoots a bit but ultimately it falls back.
The Chart below has the S&P500 (the key US Index in my view) with the Daily Candles over about the last 9 months ish. Firstly, note my Mauve/Purple/Pink sort of Arrow pointing to a similarly horribly coloured Line. This Line marks a possible Resistance Line for the Price.
My Black Arrow points to the 200 Day Moving Average, which, as with the FTSE100 is falling (but not as steeply) - which shows a Downtrend. My Blue Arrow is pointing to the 50 Day Moving Average, which is also falling. Note both of these Lines could act as Resistance.
We will cover this more on the next Chart, but note the Support Level at the bottom of the Chart at 1812 (Red Horizontal Line) and the Resistance Level at 1950 (Green Horizontal Line) - could this be a Sideways Range in coming Weeks?
My Black Arrows are pointing to Key Support Levels at 1812 and 1810 - I wonder if this is a ‘Double Bottom’ and you might be able to imagine a ‘W’ shape. I guess the test of such a Double Bottom would be if the Price can Breakout to the upside - we probably need to see it over the Green Horizontal Line at 1950.
We start off with a Long Term Chart of the Nasdaq Composite Index - the Tech Index for the US. Note the very clearly defined Uptrend Channel and look at how my Blue Arrow is pointing to where the Price has broken out to the downside below the Bottom Black Line. This is not good.
Note the Lighter Blue 200 Day Moving Average Line is not falling all that much - it wouldn’t take much positive Price Action to get this level and even moving up - but I doubt that will happen.
My Red Arrow points to the Darker Blue 50 Day Moving Average which is clearly falling. This will also act as Resistance - this is around 4700.
My Black Arrow points to a decent White Up Candle from Friday - when I first looked at this I thought it was a good sign and then I dug through my Mental Memory Bank and had a feeling it might not be so positive. Anyway, I dug out ‘Candlestick Charting for Dummies’ (you can get a copy from Wheelie’s Bookshop) and if you look at Page 176 there is a ‘Double Stick Pattern’ called a ‘Bearish Thrusting Lines’ - I think this could be what we have here - so it’s perhaps not so good.
Again, I wonder if a Sideways Range might be forming up - with the Floor at my Red Horizontal Line at 4210 and with a Ceiling at my Green Horizontal Line at 4636.
Below we have the Brent Oil Chart for the last 6 months ish. Note the Red Arrow which points to the Red Downtrend Line which is dominating this Chart - this is a Resistance Line that needs to be broken-out of.
Note also the Blue Arrow which marks out the 200 Day Moving Average - this is around $48 at the moment - again, this could act as Resistance.
My Blue Circle shows a strong area of Resistance between about $36 to $40 which will be tough to get over. My Black Arrow points to a Red Down Candle from Friday - after the ‘Inverted Hammer’ Candle from Thursday - which suggests the Price will drop in coming days. Note however, there is good Support at $30 where my Blue Horizontal Line is parked. $27 is Key Support which must hold where my Green Horizontal Line is.
If you read my Index Update from last week, you will possibly remember I was drawing some alternative Upper Trendlines which in essence was the line marked by my Blue Arrow and Blue Line below. Anyway, I now think the Black Line and Black Arrow I have drawn in show where a very Clean Resistance Line is - although clearly I have been undertaking some ‘Line Fitting’ here which is not good practice in Charting.
My Black Arrows are pointing to where the 50 Day and 200 Day Moving Averages appear to be converging - we might get a ‘Golden Cross’ soon - unlike the one earlier, this would be very good news for Gold Bugs.
Finito. Good luck for the coming Week, WD.