KCPO:- Market To Go Higher ? -12/6/2010

 

Prices moved out of the Bollinger Band on last Monday with a complimentary  Stochastic turning positive which confirmed a buy signal. Take note the ADX has turned flat, so I would not get overly too excited on the bull yet. Though price may just go higher, but since the Stochastic has now reached the overbought zone, I would use last 2 days low minus 3 points as my stop.

 

The weekly chart remains bullish as the MACD continues to rise  and so is the ADX. This is telling us the bullish trend is powerful. Last week candlestick was a solid big body white candlestick after the previous week's doji, and it is closing above its prior fractal high of 3452,  so this is another solid confirmation of a strong bull.

A bigger picture here would be:- if prices start to fall from here, then we would have a bearish divergence formed at the daily chart and that is bad news for the bull. Like I say in the past, the presence of a divergence does NOT mean that prices would collapse or shoot up the next day. But it is definitely a flashing warning sign that you should STOP thinking the party can go on forever. Instead you should start getting on your toes and be cautious.