Klinger as leading indicator

Note in this chart that the Klinger indicator shows a bearish divergence, followed by a turn down in soybean prices soon thereafter. One must always pay close heed to divergences, since they are one of technical analysis' most reliable indicators.

Days like this can be very erratic, but it appears that the bulls may be beginning to reassert themselves. Eventually, it is quite inevitable that the prevailing trend will confirm itself once again.

One of the Three Natural Laws of Trading:

Law #2 from Chick Goslin's book, Trading Day by Day is this:
Continuation is more likely than change

Use of Bollinger indicators

So far, the Bollinger Squeeze indicator in the bottom subgraph hasn't changed to red. Sometimes (not seen in the above example), we will see a single green dot as the histogram changes from bullish to bearish (from green/dark green to red/dark red). The small chart at right shows this phenomena. During a bullish trend, when momentum is starting to falter, the bright green histogram will change to dark green. Then, as bearishness prevails and the histogram crosses the zero line, it will change to bright red. When the bearish momentum begins to wain, it will also turn back to dark red. This is a sign not to take a new position or add to an existing one. It is also a good sign of a good possibility that the market will change direction entirely.

Another sign of waining momentum appears in the Bollinger Bands themselves. When prices rise to a new high, but remain within the Bollinger Bands, it is a sign of fading momentum. This is a time to tighten stops or exit positions (Rule #1 of Phantom).