KCPO:- Market Direction Unclear Yet -10/18/2010

This market took the lead from the previous Friday's US commodities market, it gaped up on open but then it failed to follow through. The whole of last week saw prices getting stuck around 2930 area. As I said last week, I would take my profit and stay aside to watch for more concrete and convincing signal.

The MACD has again failed to register a higher peak following the prices, thus forming yet another bearish divergence. But as both the Stochastic and MACD are still positive and prices maintain above the upper Bollinger Band and the ADX maintaining its ascent, we have to agree that the bull is still in there.


The weekly chart's MACD and Stochastic are still positive. The ADX is still rising and now may break above its 20's signal line which is hinting a stronger trend may emerging soon. The former resistance of 2730 area is now turned into a support area.

Again it is difficult to tell whether this market will be going further up or was last week's action just another sign of extreme volatility that usual appears at the end of a market cycle. So I would prefer to stand aside first before some solid concrete signals appear that would enable me to make a more educated decision.

Chartwise, many markets may be near their terminal points. These include major FX like USD,AUD, GBP, CHF and JPY. Currently with  more than 95% of the market players turn bearish on the USD,  I think USD may be near its bottom. This could be one of the major reasons that the FX and commodities market have been acting up recently. To follow what market Gurus' golden words that if we are unsure of a market, you should stay aside. I think it may one of those times now.