The XAO was down just over one percent (-1.06%) and higher than average volume. That's the second major reversal candle in four days. The rise from 10th January is looking more and more like a bull trap. But topping patterns tend to be a drawn out process - not a one and done event.Given the analysis I gave in earlier posts on the relationship between the Major American Indices and the Small Ordinaries and the American Transport Index, the topping process seems to be in process.
The negative divergences between the major indicators and the XAO show that momentum is slowing. That doesn't mean we must have a big correction - but they do flash warning signals.
Until the Super Trend Line on the Index pane is broken to the down side and the major indicators turn negative, the trend remains up. Look for:
- MACD Histogram below the Zero Line
- Smoothed Repulse below the Zero Line
- RSI below 50.
An initial signal will be given by the Daily Stochastic closing below both its signal line and the 80 level.
When all the ducks are lined up - then we'll have confirmation that the trend has turned to the down side.
Currently, the market is flashing lots of warning signs.
Good luck
Red
No comments:
Post a Comment