KCPO - Will The Bull Makes A Comeback ? -11/19/2012

 

Last short trading week staged a rebound in this market. Last Monday's Japanese Candlestick was dramatic early losses of to near 100 points was completely wiped out and turned the day into a solid gain. If you trade strictly on Candlestick pattern, that should be a warning blaring straight into your face. I do not follow the Candlestick trading method, so I closed off my position the next day when price went above the bottom band and also I bought the market since the Stochastic turned positive and compliment the buy signal. By Friday, the MACD has also turned positive.

 I mentioned earlier on 2230 as a support and what a support it turns out to be ! Now the whole picture may has changed as that support level held and we are getting a double bottoms formation with a possible bullish divergence at the MACD. As I have written here numerous times, a divergence is like a warning light blinking in front of us. They are telling us there may some monstrous reversal ahead and we should pre-plan our positions. As in the current case here, the correct thing to do is either to close off all your shorts position or at least lessen your holdings.

I have bought again but I remain cautious that the bulls may not yet be ready as the MACD is still below its zero signal line and the DMI remains negative. But the recently turned flat ADX is telling me that the prior trend may has ended. I will place my stop at 2381 less 3 points. As if price continues to rise, either use the middle band or prior day low minus 2 as stop.



The weekly chart remains bearish as MACD and DMI stay negative and the ADX is still rising. But as mentioned last week, the Stochastic is still positive. The weekly Japanese Candlestick has not confirmed anything as it did not close above the prior week's high. But yet it is still awesome enough to warrant your attention. By the coming week I would need to see price goes above 2447 to start falling in love with the bull again. As like the positive Stochastic , there is another item here at the weekly chart that may be subtlety warning us and that is at the DMI. Take note the D- has been forming lower peaks, this is telling us "secretly' that the bears may NOT be as powerful as they are trying to get us to believe.