Harami on MCP, RSI still quite high after successive dips

MCP touched the support slope but showed some bullish sentiment last Friday as it stopped price from moving downward. This results to a candlestick pattern called Bullish Harami.

The Bullish Harami is a sign of disparity in the stock’s health. The stock is characterized by a downtrend and a bearish mood, and there is heavy selling reflected by a red body, which further supports the bearishness. However, the next day prices open higher. Thus, a small green body is formed. This may signal a trend reversal since the second day’s small real body shows that the bearish power is diminishing. Harami’s are not a strong reversal signal so we need to see a confirmation the following day.

Confidence could have been strong if the price closed above the Kijun Sen but still upward trend is intact based on the chart we presented last week. Tenkan Sen is moving above the Kijun Sen and price is above the Kumo. These are all bullish signals from Ichimoku system.

Although RSI or Relative Strength Index has dropped from 70, it is still near overbought level.

Caveat!

 

Indicators based on Ichimoku system

Weekly Chart Oct 21 – 25, 2013

Price location relative to Kumo (n/a)
Tenkan Sen/Kejun Sen Cross (Bearish)
Kijun Sen Cross (Bearish)
Chikou Span Cross (Bearish)

Daily Chart 21-Oct

Price location relative to Kumo (Bullish)
Tenkan Sen/Kejun Sen Cross (Weak Bullish)
Kijun Sen Cross (Strong Bullish)
Chikou Span Cross (Bullish)

Leave a Reply