KCPO - Retracement Begins - 1/14/2013

 

Last Monday the retracement began as expected. Price went below the top band with the Stochastic crossing down. Since you are of the prudent type of traders, you may want to enter the sell trade on the next day when the Stochastic went down below its 80's signal line and the DMI went negative too.  The MACD turned negative on Wednesday.  The ADX has gone flat for the past 2 days, it may be preparing to hook up which will signal the beginning of a new cycle.

As the ADX is below 20's I would place my stop at 2435 which is a little further in order to prevent getting whipped out. When if price continues to fall further, using the middle and bottom band as stop should be prudent.

 

The weekly chart's Stochastic and MACD stay positive and continue to rise. But since the MACD is "far" below its zero signal line, I would not place too much hope on the bulls yet. The Japanese Candlestick is a bigger black body but still manage to stay above the bottom band. But the D- has started expanded outward which mean the bears are flexing their muscle again. But it has not gone above the flat ADX yet, so this is still read as the end of prior trend remains intact. But if D- manages to cross above the ADX again, that would mean the bears are back in control again.

I remain bullish on the daily chart's earlier setups and continue to harbor vision that this market will stage a powerful rally again. But that must remain my game plan and not my trading plan. The trading plan is always to trade any new signal that comes forth. As it is now, it is a sell signal, so I sold. Until the next buy signal appears , I would keep the hidden bulls game plan as such - on the back burner.