FKLI - Is The Bull Exhausted ? -5/20/2013

 

Price went above 1787 on last Wednesday but failed to closed above it and also failed to go higher than its high the next day, so I did not engage in a new long trade. Instead I went into a new short trade on last Friday when price went below the top band with a confirmation from the Stochastic which turned negative on Thursday. Friday price went below the signal day's low. But as last Friday Japanese Candlestick was a Doji which might mean the market is hesitating again and with both the MACD and DMI remain positive, so I would be careful on the current trade and therefore place a stop at the top band plus 2 points.

The ADX has turned flat, this means the prior bull cycle may be taking a rest, at least for now.

 

The weekly chart is getting complicated as the Stochstic is negative but the MACD is positive and rising. The ADX is also rising , this means a trend may be in development. But price has not gone above the previous week's high and the Japanese Candlestick is a bearish Harami which mean the bull may be getting exhausted. A Japanese Candlestick usually carries more weight in a weekly chart than in a daily chart. So we have to be cautious on this one.

As there is no major bearish hints at  the daily chart , so I can only assume what we may have is merely a retracement before the market go higher again. As long as we keep our stops in the trading, then we should have nothing serious to worry about.