Sunday, November 9, 2014

FCPO -  A Correction Has Begun - 11/10/2014

Displaying OD FCPO D.png

Last week I warned of an overbought Stochastic and DMI at its extremity, so a correction should not be ruled out. And that correction did in fact came. On last Wednesday price went back down below the top band and that closed off my position. I engaged new short position on the next day when price went below the signal day low. Price has continued to fall further and now has gone below the middle band which is adding more power to the bear.  I am now placing my stop at above the top band and will tighten it if the Stochastic gets oversold.
the MACD and Stochastic have turned negative. The Stochastic has now gone below the 80's level. The DMI is still positive but the D+ is fast falling and it has reached the 30's level on last Friday. This is a sign that the buyers have been leaving the market. The D- has crossed above the 20's level which mean the sellers are getting bolder and flexing their muscle. The ADX has begun to fall which would mean the prior up move cycle has ended. 

Displaying OD FCPO W.png 

The weekly chart's Japanese Candlestick reflects the daily chart's correction. It has formed a Dark Cloud candlestick which is considered as a warning to a possible reversal . Both the MACD and Stochastic remain positive and rising. The DMI is at an equilibrium. The D- is still falling and that means the sellers are still leaving. But the D+ stays flat which mean the buyers are hesitating again. It is important that price must recover fast and preferably above last week's high or it could mean the bull is in trouble again.
If the current correction goes deep then I am afraid it may erase off what ever subtle bullish signal I have been reading from the longer time parameter charts. Otherwise it would mean the bull is gathering strength for another round of push. 

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