KCPO:-  Divergence Gone So I Am With The Bears- 10/10/2011

The bear gathered strength and pushed prices through the support level. Again a real time lesson to be learnt here:- though the Stochastic reached the "oversold" zone by last Monday, but it did not stop the market from losing another 130+ points in a week. You should take note that the falling MACD is being backed by a rising ADX. This is confirming a strong trend has already developed.  You should take note of the expanding Bollinger Band as a confirmation of trend. As long as the ADX stays rising, I would stay on the side of the bear. Place stop at 2850 or last 2 days low plus 3 points.

 

The weekly chart is reaffirming the bear as the Stochastic has turned negative again.This is coinciding with the negative and falling MACD, negative and expanding DMI. The ADX is still rising and prices go lower below the bottom band. All these are confirming the bear is strong.

The bullish divergence is now erased off. So I am firmly on the bear side now.