KCPO:- A Rebound Found -7/11/2011

Last week I thought we may be seeing a possible rebound with a double bottoms formation and an oversold Stochastic. The market lingered the first few days and hit the buy button on Thursday when price closed above the lower Bollinger Band and then  went further by exploded up on the following day. Place stop at 3045.

Both the MACD and the Stochastic have turned positive. When if the Stochastic is crossed up its 20's signal line would offer a more solid buy signal. Also I would like to watch price closing above 3136 which is its recent fractal high. The ADX has flattened out, this is confirming a temporary end of the prior trend.

 

The weekly chart remains bearish as both the Stochastic and MACD remain negative. What is more worrisome is that the ADX has just begun to rise. This is indicating the bears may be gathering strength. So you should watch the 3031 support, any breach of that level will bring out flesh selling. We would need a strong up move in the daily chart to alter this bearishness in the weekly chart.