“Those who have knowledge don’t predict. Those who predict don’t have knowledge.” Lao Tzu, Chinese philosopher, 6th century BC


Friday, 13 December 2013

13 Dec 2013

It is my belief that we are in a Holding pattern and that the corrective phase is not over.  I do believe that next week should see us moving lower before we move higher.  That said, it seems to me that the Head N Shoulder pattern is the one to follow.  Targets for this measured move should be within the 1760 to 1750 range.  I mentioned yesterday that the daily lower BB line was pierced and that any move to the downside can only be sustained if the prices relieve itself by a pause or rally before proceeding lower.  So far so good I guess.


Be aware that the Daily Stoch. has reached oversold levels.  This is usually where to go short and not the other way.  The entrance into overbought or oversold usually keeps price at an accelerated or impulsive mode.


  1. One thing I am not sure is when Stoc indicates an oversold in daily, why to go short instead of long

  2. Overbought are 80 and above, whereas Oversold is below 20. Generally there is a misconception about the words overbought and oversold (people tend to think its extreme), but actually it is the opposite. OB or OS have a higher percentage of acceleration in price. If you have a charting account, draw a vertical line each time the Stoch. indicator enters and overbought or oversold range and you will see what I mean. If not just blow up the charts I show you and put a straight edge to your screen to see where prices go once its in the range.

  3. Yes, I got your point by looking your 60 min chart. But I observed that most of the time when it entered the overbought/oversold zone, it accelerates to hit top or bottom and reverse the trend. Does it mean that entering the zone would also mean the original is coming to an end and reverse after it accelerates to the last shot from the original trend.

  4. The price percentage change vs time reversal is two different things. You can stay sideways longer, but to get volatility like this is only found in oversold and overbought. So if you only play the OB OS range you could make a run even if its at a short time period. The clue to see is when it diverges with price or you can exit if the Stoch crosses downward or out of OB / OS.