Millionaire Trend Trader: Bearish Engulfing Candlestick

Thursday, November 12, 2009

Bearish Engulfing Candlestick - profit taking on new high

Share prices on Bursa Malaysia ended broadly lower yesterday on profit taking after six days of rally. FBM KLCI was dragged down by selling pressure on key heavyweights to close 3.93 points or 0.3% lower at 1,270.15. However, the benchmark index charted a new year high on intra-day at 1279.52, the highest level since May 23, 2008. Losers outnumbered gainers by 451 to 248 while 238 counters were unchanged. Turnover was slightly lower at 1.0987 billion shares.

As pointed out in yesterday’s analysis that the candlestick formation on Tuesday might indicate a possible top at this level, the price action of the KLCI yesterday confirmed the signal by forming a bearish engulfing candlestick pattern. Nonetheless, this could be just a correction due to profit taking as the KLCI chart new high. The underlying uptrend of the KLCI is still very much intact. RSI hook down slightly at 67 and Stochastic was flat at 87 are still bullish, and MACD has just made a golden cross above its trigger line, indicating more upside to come.

Today, the FBM KLCI is expected to trade within a range of 1262 to 1280.

This week's expected range: 1240 – 1282
Today's expected range: 1262 – 1280

Resistance: 1277, 1280, 1283
Support: 1259, 1262, 1267

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The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. - Jesse Livermore

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Thursday, November 12, 2009

Bearish Engulfing Candlestick - profit taking on new high

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