Sterling say cash flow will increase by 400% in 2006

marnewton - 14 Dec'06 - 15:04 - 12072 of 12072 edit

I think we're only days from a significant move...probably up.

On some measures we've already moved from the canopy of overhead downtrends and I've previously mentioned the significance of 16.625p...Gann and all that jazz!

Yesterday SK-SD gave a buy signal. No great shakes on its own but MACD is about to follow suit.

(MACD in its oscillator mode is only just below the zero line (0.28), not a major buy signal but worthy of note in combination.)

The 21 day Stochastic is also within an ace of a buy signal.

But it's the positive (or you may prefer 'bullish') divergences that are getting my attention.

Look at the MACD Oscillator and the 14 day RSI.

Even better is a proprietary RSI that I use based on an exponentially smoothed average (as opposed to weighted), a very clear divergence going back to July.

OBV, perhaps the most widely used 'diverger' is also showing a slight positive divergence.

MoneyFlow, another of my favourites, hasn't joined the party.

Nevertheless, just one positive divergence is significant, here we have 4.

In themselves they are not buy signals, more early warnings.

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I posted that on the afternoon of the closing low.

MACD did give a 'minor' buy signal and the Stochastic has actually moved towards overbought territory.

I'm happy with both the daily and weekly charts, they have a bullish hue.

Yes, 19.0/19.5p may well be a tough nut to crack, but as things look today it could happen sooner rather than later.

I'm looking for a higher low.

Good luck,

M