FKLI - Will There Be A Pre-CNY     Rally ? - 1/10/2012

 

I have been watching the Stochastic as the ADX has remained low. So when it begins to go into the overbought zone, I tighten stop and took out my long positions on last Wednesday when price went below the previous day low.  I am not doing anything now as there has been no new signal to buy or sell yet.

The Stochastic has turned negative while the MACD remains positive. With the low ADX and the 2 contradicting indicators, we have a confirmation that the market is stuck in a sideway mode. I would suggest ti look out for a possible Stochastic crossing down the 80's signal line and a price closing below the top band as a new sell signal. For the buy side, I would suggest using the intraday signal to go in and I would keep those trades short term.

As the weekly Stochastic is also in the overbought zone, I would be very cautious if prices are to do another new high as it maybe to create a possible bull trap. So I would suggest to take short term profit on any buy side  trades.





The weekly chart's DMI finally has turned positive. The MACD and Stochastic are also positive but the Stochastic has already gone into the overbought zone. I am paying more attention to this indicator since the ADX has been falling.  The Japanese candlestick of Doji Star is worrisome for the bulls as it may be forewarning us about a possible reversal. If the coming week closing goes below this week's low, then we may have a confirmation that the bear is back for business.

We are already reading some "experts" talking about a pre-CNY rally. Though it would be nice as that would place some money into everybody pocket for festival  spending. As chart readings mentioned here, I am a bit skeptical  for a bull rally. If prices really rise in these 2 weeks, I would still approach it with extremely cautious . Though EU crisis may be coming to a possible temporary bottom, there are still many loose ends to be dealt with. Hungary has crashed, but there are still many waiting for their turns.