KCPO:- Will The Market Collapse Again ? -1/24/2011

 

As the ADX has been falling, I am applying the Stochastic to trade this market. When price failed to take out  the lower Bollinger Band but instead went back up to close up above the level, I decided to take out my shorts positions. I turned long the next day when Stochastic turned positive again with price stayed above the lower Bollinger Band. I will place stop at 3667.

 


The weekly ADX has turned flat. As it is now above both the D+ and D-, it may be signaling the end of the prior trend. The weekly chart still offer no sell signal as the Stochastic still maintain above the 80's and MACD stays positive while prices stay above the upper Bollinger Band. Any breach of 3640 should ring a new sell signal.

As the ADX continues to fall toward the 20's, I would advocate short term trading as it may develop into another range bounding situation. But the bearish divergence is so glaring that I think this market may just do another collapse soon.