Sunday, May 4, 2014

FCPO - It Would Be Havoc If The Support Level Fails To Hold - 5/5/2014

Price went above the top band again with the Stochastic confirming a buy signal. But price failed to confirm the signal as it never went above the signal day high. Instead price began to go below the top band again with the Stochastic confirming it only on the second day. I sold on last Friday when price finally went below the signal day low. The trade may be turning into a perilous one as price recovered on the same day and closed high. It is also closing back above the 2573 support level.  But the Stochastic , MACD and DMI are all on the seller side now as they are all negative and begun to fall. The DMI has been extremely dramatic as the D- hooked up to 33's level, signifying the strength of the sellers.  The ADX has also begun to rise to 20's level which is confirming a new cycle. I am placing my stop at above the bottom band. 


The weekly chart's Stochastic and MACD stay negative and still falling. The DMI's gap is getting narrower and we may see it turning negative in the coming week. The ADX is still falling and it has now reached 20's. The weekly Japanese Candlestick is a large body black candlestick that completely engulfed the previous week's candlestick body. If this occurs in a rising trend , then it would be a very bad omen. But since it is occurring here at a consolidation range of a recent downtrend and most important of all, since it failed to break below the support level of 2573, so it may mean this could be final selldown. But of course all depend on the next Candlestick in order to confirm a possible reversal.


The monthly chart's indicators remain positive and rising but price is not looking too encouraging as price has now closed below the top band. Even though there is no new sell signal, I would still consider this as the end of the prior up cycle, at least momentarily. The ADX is still falling and it has now reached the lowly 13's. This means there is a lack of trend.

Though the weekly chart's Japanese Candlestick may be hinting for a possible reversal but the daily chart has conformed a sell signal. I would trade according to my trade plan. I mentioned here last week that FCPO seems to be imitating the US Dollar Index chart. The USD is also now at its all important trend line support level, if the level fails to hold, then we may see the Dollar going for another round of selling and I think the FCPO would follow suits. Even the fundamentals do not seem to support for a lower Dollar because of the increasing heating up conflict with Russia over Ukraine; good employment statistics; good overall economic recovery etc., but as a technical trader, I would rather wait for the charts to confirm. But I cannot help but feel sorry for all those fundamental gurus who went euphoric when FCPO hit 2,900's and began to scream :- "Buy ! Buy !"

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