KCPO:- Watch Out for the Bear - 28/12/09

Last week I was uncomfortable with the up moves as it was not accompanied by the indicators at the same time and I advised of taking profit if prices go 5 points below the previous day low.

The indicators have now turned ugly as the MACD continues its descent while the Stochastic has crossed down again and it is going towards its 50's signal line. The ADX which is above both the D+ and D- has now started to fall. This is usually a signal telling us the prior trend has ceased, at least for the moment now. You should also start to take note that the MACD has formed a bearish divergence. This is telling us the big boys in this market have been faking their bullishness, they may be just luring more fools in so that they can sell off their positions at a higher premium. But since the MACD is still relatively "high" above its zero line, I would suggest you keep an eye on this one as they may put in a few more attempts on the same tricks by pushing prices higher. Until MACD forms a higher peak then its last peak, thus erasing this divergence, then you may go back and rest easy.

If you had shorted the market when it broke below  the upper Bollinger Band, then place a stop at 2530.

 

The weekly chart remains bullish as prices maintain above the upper Bolliner Band and the MACD is still rising. The Stochastic has now entered into its "overbought" zone. But since the ADX has been rising and now has crossed up a falling D- which is usually a more bullish buy signal. So I would emphasize more on the MACD .

So again as like the previous week, the weekly chart remains bullish while the daily chart has shown signs of weaknesses. So like as in the case when we are unsure of the market - either we stay out or we trade small. But I would be more cautious now as the USD has been strengthening which is usually unkind to most commodities.