FKLI:- Market Still Undecided - 4/18/2011

I was talking about a possible reversal 2 weeks ago and that reversal finally came last week. I went back into sell again when price went below the upper Bollinger Band with a negative Stochastic. The MACD has also turned negative. But so far the ADX has remained flat and below 20's, so again I would watch the Stochastic preferably over the MACD.

Last Friday price action was a Doji resting on the support of the lower Bollinger Band which is telling us that the market has again gone undecided. Maybe the market would want to see the result of the Sarawak state election result before deciding on their next course of action. But for those of us who use technical analysis to read the market, I will consider the lower Bollinger Band as a make or break level. If prices go below this level, most probably we will see the momentum picking up. Or it could just bounce or hang around this level for a while.

Since the ADX is at an extreme low level, you can either place a stop at 1525 and take profit or you can place the stop higher at 1532 to bargain for a possible stronger move downward.

 



The weekly chart is a classic example of a trendless market. The ADX has begun to fall again and it is now at a new low reading of 15's. The MACD is negative and fall again while the Stochastic is positive and rising. Both are contradicting each other. Price has now fallen below the top Bollinger Band and if you read this alone as a signal, it should be a sell. But since the ADX and the 2 indicators are telling us there is a lack of trend in this market, so you can expect price would probably play around within the bottom and top bands.

Of course while the smaller picture remains muddled  , the bigger picture remains extreme bearish due to the presence of the bearish divergence. So again I would pay more attention to the sell signals over the buy signals. The fundamental side of the current story remain the possible implosion of the PIIGs. Of course Australia and China have never left my radar for their possible candidacy for the next meltdown point.