FCPO:- More Extreme Volatility, So Stay Out - 11/29/2010

 

I would also like to start with the weekly chart with KCPO too. The rubber band effect that I warned of last week did strike again. Prices went down almost 200 points before snapping back to a mere 52 points loss. The upper Bollinger Band is providing a strong support for the current retracement. Although the Stochastic continues to fall towards its 80's signal line, the MACD  and ADX remain strong and healthy. With price remains above the upper band, I cannot talk about any possible bearishness here.

 

The daily chart is a typical sideway market with the classic formation of D+ and D- wiggling together like worms. On top of this, the ADX is falling. Prices have got locked up within the Bollinger Band. But both the MACD and the Stochastic are negative and continue to fall. So I would pay a bit more attention to the sell signal. But I think a fast falling ADX should be a good reason that I should keep myself out of this market for a while. I would like to sit and wait out for another week to see a up and down range formed  which I would mark them out with 2 horizontal lines. The I would wait somemore for a breakup or down from those areas.

As I said here last week, I am not expecting a collapse in KCPO yet. This is also true in many of the international commodities, though some of those hot and much hyped ones like gold may be in the process of signing their death warrant. So for those of you who are taken in by the experts' talks of gold is god, be forewarned here. There is nothing in the real world that can go up forever.