KCPO - Bulls May Be Ready But Lack Strength -1/28/2013

 

Last Wednesday price managed to close above the top band with the all the 3 indicators  confirming, so I went in and bought again. But since the ADX remains flat and low at 13's, I would place my stop a little further in order not to get forced out. I am placing the stop at the middle band minus 2/3 points. As the trade progresses upward, then I will raise the stop to the top band minus 2/3 points.

But I would not place too much faith on the current trade simply because the ADX is dead. I also notice the Bollinger Band has begun to squeeze. Another sign that the market will be range bounding.


 

The weekly chart's Stochastic continues to rise , so is the MACD. But the MACD is still below its zero signal line, something I do not think it will lend much power to the bulls yet. The DMI remains negative and the ADX is still flat above the DMI. This is at least telling us the prior bear trend has ended, even though it may just be temporarily. I also take note that the Bollinger Band has begun to tighten which is also happening at the daily chart. Price has not been able to close above the middle band and I will be using this as a trigger to buy in new positions. At the same time, I will be using a breakdown below the bottom band as a signal to sell.