KCPO - Will it goes sideway or will it collapses here ? 15/3/2010

As I was thinking last week as both the indicators turned back in tune again, that this market should move higher more solidly. But instead the market turned shaky and gave way on Friday when it took out my stop.

The daily picture now has taken an ugly turn as the Stochastic has gone back to negative and failed to keep above its 80' signal line. The MACD may still be positive but has hooked down and turn negative soon. Price is now below the upper Bollinger Band, all these have offered me a reason to place an initial short position in. I am placing my stop at 2669. I would NOT engage any big position in yet as the ADX is below 20's and it is also falling. This means this market is not trending .

There is an interesting item found at the Stochastic as it has already formed a bearish divergence with the recent higher prices. Though I usually read divergences with MACD rather than from Oscillators, but since the Stochastic I applied here is of the slow default, I would keep an eagle eye on it. With many of the commodities have been falling recently, I suspect CPO may just follow suit.

The weekly chart seems to be supportive of a more bullish readings as the Stochastic continues to rise and so is the MACD. Price still manage to stay above the upper Bollinger Band and the D+ is above the D-. All warrants a bullish reading. Even the ADX is supportive by continuing its ascent.

Last week there were some analysts talking about CPO at 3,000. Actually the daily chart seems to be forming a rare inverted head and shoulder which is extremely bullish. If this holds true, then what is 3,000 as we may see much higher. But I cannot find other bullish item to support this (like a bullish divergence at MACD), so at this moment, I am not sure of what it will do next. So for the moment, I would just react to any new trading signal until I can find more complimentary signals.