FCPO - A Correction Finally Arrived And It Will Be Nasty - 12/16/2013

 
I have been talking about a possible strong retracement in this market for the past 2 weeks, after the previous conflicting and confusing signals, a good sell signal finally came last Monday. Price went close below the top band with a confirmation from both the Stochastic and MACD. I sold on the next day when price went below the signal day low.  By last Friday price has already fallen below the bottom band which can also be interpreted as a beginning of a bear cycle. Though the DMI remains positive but it is quickly closing the gap between the D+ and D-. We may see a negative DMI by the coming week. The ADX has renewed its fall again. I read this as a counter trend in action. Instead of using the prior day high, I would use the bottom band as my stop because there is a bearish divergence formed earlier, I would want to take advantage on this kind of usually highly profitable trade. But once the Stochastic has gone into the oversold zone, then I may revert to the prior day high as stop.


 

 The weekly chart begins to change as price has closed below the top band which is a bearish sign. The Stochastic is in its overbought zone and has crossed down its moving average. The MACD remains positive but has now hesitated and gone flat. The DMI is also remaining positive but the D+ has been falling which is telling me that the buying is retreating. The ADX has turned flat which is confirming the prior trend may has stopped. There is no new signal yet as the price below top band has not been confirmed by the indicator. The previous resistance of 2485 should become the new support.

The past 2 weeks there have been many fundamental analysts beginning to turn bullish about this market. This is so weird as though the market fundamentals have changed so suddenly. But when I saw their commentaries over the newspapers, I begin to pay closer attention to my intraday and daily charts. Though there is most probably no scientific explanation to it, but whenever they start to get too happy on a market, I always begin to look for the exit door.