The index has been moving sideways for the past 3 weeks and the resistance near 4300 is still holding its position. Question on whether the index would also be able to hold its position alongside the resistance line is still unanswered as the chart is giving us mixed signals.
Looking at the RSI it has recently been creating lower highs from the previous overbought level at 78 while the index is creating higher highs. This is a common sign of a negative divergence between the index and RSI which is a bearish indicator. This bearish sign was also accompanied by decreasing value turnover, further strengthening the idea that the index is losing steam. However, trading last Wed saw a higher than usual value turnover that accompanied the white candle, which is a bullish sign (This is probably due to the bullish trading in the mining sector).
Trading by Monday would give us a picture where the index would be moving for the coming week. If the trading last Wed would hold water, then by Monday alone, we can immediately see a follow through in bullish trading. Otherwise, if follow through does not happen immediately, then it’s back to sideways movement giving a higher possibility that the index would succumb to the bearish indicators.
MPI has been moving bullishly over the past 4 weeks and it looks like this stock may be nearing a point where it loses its upward momentum because of an upcoming resistance at 3.90 (which is a point in the resistance line connecting the peaks from Nov 3, 2010 and Jan 4, 2011) and 4.00 (which is a logical resistance). Aside from the resistance line, the stock is now in the overbought level. Also looking at the volume for the past 2 trading days where a white candle has been created, the volume is way below the average volume. All of these are pointing to a possible slowdown of the bullish advance.
I would advise to sell a portion of your position for the mean time as I do not see that this stock will still be able to sustain further upward movement. At best it would probably start to move sideways for short while between the 65 day moving average (orange line) 3.70 and the resistance line at 3.90. The stock still has the potential to move up to 4.40, but it needs to regain momentum (more volume on the upward movements) and with the possible sideways movement for this stock, this means 4.40 would not be reachable in the very near future.
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