FKLI - Technical Rebound In Progress -2/25/2013

 

 The earlier buy signal was not fullfilled because the high kept go lower. But a brand new buy signal finally flashed again on last Friday when price closed above the bottom band with the Stochastic turning positive again (it turned negative on last Thursday). So I would buy again on the coming week if price goes above 1619 in the coming week.

The MACD is making another attempt to turn around but it is still negative now. The DMI remains negative but the ADX stays flat above the DMI for the past few trading sessions and that is a kind of good news for the bulls because it may mean the prior bear cycle may has recessed, at least for the time being. If ADX begins to fall, it will lend more weight to the bears have ended story.

There is a minor bullish divergence at the Stochastic with higher troughs while prices went to test the 1,600's level for a few times. This means it has formed a multi bottoms which is usually very bullish. As the MACD is relatively "far" from its zero signal line, so I would not get too carried away with this bullish formation. I would consider this as a technical rebound in an overall bear cycle.

 

 The weekly chart's Stochastic and MACD continue to fall and DMI stays negative. But price is still holding sideway and it managed to closed back above the bottom band again. Though the ADX has been rising but it is still below the 20's, thus we fail to see the new trend coming into being. Perhaps the most "bullish " item in this chart is the Japanese Candlestick which is long bottom shadow Doji. When this happens at an important bottom level (such as the current 1600's), it usually mean that a reversal may be coming. I usually do not take Candlestick too seriously at the daly chart, but I would pay attention to their significance at the weekly chart because I often find them to be more predictive. Overall the weekly chart is still more bearish biased, and I would watch closely the 1,600's level which has been providing a solid support. If that level fails , it would mean end of the world type of selloff. I am more inclined to take side with the bears because the formation of a triple bearish divergences already formed at the MACD.

The daily chart has flashed a new buy signal with a bullish multi bottoms formation and the weekly chart Japanese Candlestick hinting a possible reversal, so I would trade it as it should be highly profitable. But the overall big picture as in the weekly chart still remain bearish as ever, so the current trading mind set is NOT to be carried away by the daily chart's small bull.