KCPO - Bears Preparing Groundwork For Slaughter ? - 8/6/2012

The ADX stays flat at 20's for the past 5 sessions as prices going above and below the lower band. If you were still holding shorts positions for the previous week, then you would had closed them on lat Monday when price went above the prior day high. But no new long positions would have entered because price never went higher than the Monday's signal day high. Following my trading rules, the buy conditions were met on last Monday when price went above the lower band with a Stochastic confirmation. But I never get following up on the next 4 days when I need to see price goes higher than the signal day high. But neither have I enter a new sell trade because when price went below the lower band, I did not get a confirmation from the Stochastic.

So with the low and flat ADX, I am standing aside and has not committed any new trade. This is an important part of trading known as "discipline". But with a negative MACD and DMI , it is still prudent to befriend the bears.


 
The weekly chart is turning bearish as the Stochastic has turned negative again. This is coinciding with the negative MACD and DMI. Price stays below the lower band for the 2nd week. A flat ADX means it is a sideay market for now, but be cautious for a possible breakdown. 


 

Last week was vital for the monthly chart as the weekly close becomes the monthly close too. We are now having a monthly close of below the lower band. With a negative Stochastic and MACD, this may be the first of a bear cycle sell signal. But as in the daily and weekly chart, the monthly ADX has been falling and is now also below 20's. So you can expect some more sideway action for the time being.

Just make sure you make friend with the right party as the bears seem to be gaining more ground and maybe preparing themselves for a big onslaught soon.