Archive for August 6th, 2012

Small body indecision

Now that we are in August, it would be interesting to look at the monthly price action and understand the market trend. Small body candles are sign of indecision. And when they appear on a monthly price action, it suggests indecision on a monthly basis. Monthly candles are more significant in determining the market trend compared to weekly candles. Small (compressed) candlestick bodies indicate that there was very little price movement during the trading period, and what little movement there was had been upwards in the case of a white candlestick body, or downwards in the case of a black candlestick body. Little movement is matched buying and selling pressure.

Though there may be matched buying and selling pressure, indecisions are not necessarily negative or positive. Indecision is a pause before a continuation or reversal of a trend. For example the DOW 30 is just 5% from historical high. Now we have a monthly small body candle, which is near the previous resistance. Indecision at a previous resistance suggests that buying and selling pressure are matched. We need a clear break above 13,204 before we can look at continued positivity. Till then the indecision suggests caution.

Other indecisions at resistance are on the Indian Sensex and Rupee. Even UUP Dollar ETF has an small body candle indecision at resistance near 23. Just like Indecision can be at a resistance, indecision can be at a support level. BVSP Brazil has indecision at support. Gold indecision is at support. Natural gas has an indecisive small body candle at historical multi year supports.

This report carries an update on Indian Sector Indices. Enjoy the latest ALPHA.

Dr. Ionut Nistor is the co-author of Performance Cycles paper published in Kyoto Economics Journal in March 2009. Ionut is a professor of Corporate Finance at Babes -Bolyai University and a post doctorate fellow at the Kobe University in Japan. He is fluent in Japanese, Romanian and English.

The Bric Model from a Japanese Perspective
Ionut Nistor - Econohistory