KCPO:- Higher And Higher - 11/8/2010

This market provides a very good lesson in technical analysis here. Many will tell you since the Stochastic is in the so-called overbought zone that we should start selling the market. If you have followed you would have suffered great losses in shorts by now. Many say that technical analysis does not work because of this. To me, I always think it is not the fault of the tools, but it is often of the users. In a strongly trending market, we should only look at indicators like the MACD  for signals.

 

The market taking hints from the Americans' QE2 and push higher. The ADX has shown no sign of weakness as it continues to climb higher. Since it remains above the D+, you should keep an eye on this as this is usually an overbought sign in a trending market. Place stop at 3090.

 

The weekly chart is also as bullish as the daily's. ADX continues to rise which is telling us that the trend is strong and intact. Prices is way above the upper Bollinger Band . So is the MACD. But sometime when prices get too far away from the band, they tend to go back down to hug the band again.

Like many of the commodities markets, CPO is riding the wave of the American QE2 and perceived resulting weakness in the US Dollars. But as far as the USD Index chart is concerned, that perceived weakness may just be "perceived". My reading is that it is getting increasing bullish. Any push above 77.95 may see the mother of all bulls returning to slaughter the current bears.