FKLI:- The Market Is Holding Its Breath Over US and PIIGs Crisises- 7/18/2011

As expected the market has gone into a minor retracement and which looks like becoming a consolidation in making.

Both the Stochastic and MACD have turned negative and price closed below the upper Bollinger Band. By sticking our usual trading plan, the previous longs would have closed when either 1-2 points below the upper band or below previous day low.  As the ADX has begun to fall, it is also confirming the end of prior bull cycle.

If you have engaged shorts position, place stop at 1588.

 

The weekly chart's Stochastic and MACD may seem to changing their direction, but they still remain positive. And price still manage to stay above the upper band. But the ADX has flattened again which mean its prior uptrend has faked out.

Summarily speaking:- both the daily and weekly chart offer no clear indication of the market's next course of action. (flat/falling ADX etc) But there is a great chance that the ADX will continue to fall (more sideway market) as the whole world may be holding their breath to see how the America's debt ceiling wayang kulit works out before taking the next course of action. Or there could also be a possibility that the market may just collapse from here with as more shocking news coming from the EU PIIGs. Investors may suddenly chicken out when they finally realize how serious is the PIIGs' problem and some of them just cannot be "saved". Technical analysis will take out a great portion of the guess works from the market - buy again if prices go above the upper band or sell more if they go below the lower band.