KCPO:- Bearish Biased - 4/18/2011

 
Just as I mentioned last week on NOT to expect much for any move as the ADX was falling. I went in to buy on last Monday as it broke its recent high and supported by a positive Stochastic. And yet I was caught "red handed" when price collapsed the next day. I lost about 85 points on each contract. I stick on my trading plan - when the ADX is flat or falling, trade small or skip the trade. In this case I traded small so I limited the damage done.

On last Wednesday, the Stochastic confirmed the price action sell signal, so I sold again. Price broke below the lower Bollinger Band and the D- is getting further away from the D+, both are  encouraging sign for the bears. If price fall further, then the MACD should turn negative and another point to the sell side.

I need to see the ADX starts to rise to confirm a new trend in the selling before adding more to my positions. Otherwise with the ADX staying flat, this could be just another short term trade and I would just watch the Stochastic.

                                                                         

This week reversed the previous week's "optimism" when price again closed below the lower Bollinger Band. With both the MACD and Stochastic are negative and D- hooking up again. It is about all systems go for sell. But since the ADX continues to fall and the Stochastic is fast approaching the oversold zone, so I am keeping an eye on this item too.

There is no bearish divergence in the weekly chart, so I am not thinking  of a major whack down. But there was one at the daily chart, which the recent retracement of almost 50% from the high has been playing out that divergence. So I would not be surprise if the market goes to test 3125 or even 2925.