KCPO:-  Another Short Term Rebound - 3/21/2011

 

The selling intensified on last Monday but soon fizzled out intraday when it formed a Doji .  With that you should take it as a warning and start to tighten your stop. With such great volatility in markets these days,  you can use a tighter stop method of previous day high plus 3 points as stop instead of  the usual the lower Bollinger Band plus 3 points as stop. With the 1st method, you would have got out on Tuesday. With the 2nd method, you would have got out on Friday.

The ADX has begun to fall. This is confirming the prior bear trend has ceased, at least on a short term.

I have engaged new long position with prices above the lower Bollinger Band and a positive Stochastic. You should place a tighter stop at bottom Bollinge Band minus 3 of 3393 or signal day low minus 3 of 3373. Since the MACD is merely turning around but remain negative, this is exploratory trades but you should not place large bets. And you should pay attention to the 20 meriods moving average which may act as a resistance again.

                            

The weekly chart remains bearish as both the Stochastic and MACD continue to fall. But we fail to get a clearer confirmation on the bear as prices went down below the lower Bollinger Band but failed to close below it.  But we already have a negative crossover at the DMI, so  by the coming week if prices manage to close below last week's low, then we would get a new confirmation to sell.

Is this the end of the commodities bears ? No, I do not think so as most of the global commodities weekly charts are just starting and most FX charts continue to show signs of major reversals. So at the point of time, I would take KCPO reversal as another short term rebound. Unless prices can go above the upper Bollinger Band, then I would start to think of it as a terminal reversal.