KCPO - Bulls Quickly Fizzled Out - 1/10/2012



 

I also took my profit when price went below prior day low on Wednesday. All the 3 indicators are positive but he ADX has stayed flat. This flat ADX is telling us that this market has lost its momentum, at least for the short term. The Stochastic is inside the overbought zone, so I would be more in favor for a new shorts trade . But since price has closed back above the top band and with 3 indicators positive, I can try to catch a little more of the bull by buying over Friday's high and keep a stop at its low minus 2.

I notice there may be an interesting pattern developing in this market.  I am beginning to wonder if this market is in the process of forming an inverted Head & Shoulder ? I think give or take another 2 weeks, the pattern would become clearer.


 
The weekly chart remains bullish as DMI, Stochastic . and MACD are positive. The MACD is crossing up its zero horizontal line which should be read as additional bullish. But unfortunately the ADX does not support it as it is still falling. It has now gone below 20's which is telling us that a trend is missing. The Japanese candlestick of Doji Star may also signalling for a possible reversal pending on the coming week's candlestick. I would find more comfort with the bull if price can close above 3270.

Until something more concrete appear, just trade with the smaller trends for now.