KCPO:-  Will This Turn Into a Bigger 

Rally - 19/7/2010

Last week I was thinking that this market was going oversold because of the ADX climbing over the D-. Last Monday, the market took out my previous sell positions and immediately triggered a new buy signal as the Stochastic also turned positive.

The ADX has now started to turned down which is confirming the end of the prior sell cycle. The Stochastic continues its ascend and the MACD has also turned positive. The D+ has also turned gone above the D- while prices have gone above the upper Bollinger Band, all of these are confirming a bull cycle.

Place stop at 2405. As there was no divergence in the chart, so I would treat this as a normal technical rebound.
Watch 2495 and 2550 for upside targets.

Though the last weekly chart was flashing major sell signals , I was not too comfortable with the lowly Stochastic. I must explain here there is a great difference between a daily Stochastic which can stay oversold or overbought for days or weeks with prices continue to fall further. But the weekly Stochastic seldom (never say never) behave as the daily version. So whenever the weekly Stochastic goes into overbought or oversold zone, it may be worth your while to keep an eye as it may be near their terminal point.

Here we have the weekly Stochastic begins to turned upward and may be crossing up above the 20's signal line which may be taken as initial buy signal. This is complimented by prices already closed above the lower Bollinger Band. But you must also pay attention to the ADX which has begun to fall again. So with this, keep your eye on the Stochastic and ignore the MACD for a while as this cycle may be just another short lived one.