Sunday, August 3, 2014

FCPO - Are The Sellers Getting Ready To Quit ? - 8/4/2014

The previous shorts trade was closed off on 25/7 when price went above the prior day high. I last commented here that I thought the sellers were faking it, prices hardly went further downward for the past 2 weeks . And on last Friday price went above the bottom band with the Stochastic turning positive again. Even the MACD has begun to turn around though it is still negative. I am looking forward for a stronger signal and that would be for the Stochastic to cross up above its 20's signal line or wait for the price to go above its recent fractal high of 2294. But I am getting more confident that the selling may be over because the ADX is now above the DMI and has gone flat for the past 2 days, this is a surer way to call the current situation an oversold market.  Another piece of evidence would be the D- has been falling and it is now below the 30's. 

The weekly chart remains bearish  as the MACD continues to fall and it is below the zero signal line which mean the bear is dominating the market. The Stochastic stays inside the oversold area but it has not turned positive yet. The DMI is also staying negative but the D- has begun to fall. This mean the sellers are letting go its grip a little bit. The ADX continues to rise , so I have little to feel bullish yet. The only item that may bring some hope to the bull is the weekly Japanese Candlestick which is a long lower shadow. When this comes out in a falling market, it could be interpreted as a bullish reversal signal. Since it is the sole and a"possible" signal against all other sell signals, so I would just wait and see first.

Though the weekly chart remains bearish, there are already some subtle signals at the daily chart that a new technical rebound is on its way and when it comes, it could be a strong one as there is a bullish divergence formed at all the 3 indicators. I suspect this will play right into the El Nino and the Ebola virus scares story. But a word of warning here :- since the MACD is still relatively "far" from its zero signal line, but I would still keep my stops tight as the sellers may still want to play their last hand before surrendering.

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