The market started off today with another drop followed by debt concerns in Europe, especially in Italy. Although there is nothing new about this, we are in a very volatile market now, any good or bad news, albeit inconsequential, may impact the market. Again, I expect strong corporate earnings coming up and I still believe this is an intermediate correction as opposed to a bear reversal.
Trade today is CPIX, and trade signals are:
1. Very clear Falling Rectangle, one of the most bullish chart pattern. What's better, this pattern was formed during a more than 2 months period, boding well for a bigger move in the near term.
2. ADX kept falling during the formation of the falling rectangle to below 15 and it started trending upward a couple of days ago. +DI crossed over -DI and the distance between +DI and -DI is widening.
3. Positive Divergence of MACD line and Price. Price was forming lower highs and lower lows but the MACD line didn't form lower lows. This could've been a more powerful divergence had the MACD Histogram showed the divergence as well.
Trade taken: Long 1/2 position @5.65, another 1/2 position @5.50 for an average cost of 5.58.