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KOL: Analysis of the EWP

I will begin to monitor KOL.

Despite the big picture does not look bullish at all since 2 obvious patterns stand out in the weekly chart below:

  • Head & Shoulder with price now back testing the neck line (Red trend line)

  • Bullish falling wedge (Not complete yet) with price now testing the upper trend line (Black trend line)

Hence if one of the two patterns is playing out then price should be on the verge of resuming the downtrend.

KOL Weekly Chart
Larger Image

However weekly momentum is suggesting that price could have established a longer-term bottom at the September 2012 low and a different pattern is forming.

  • A MACD buy signal is in force since Aug 8 2012

  • The RSI has moved above the 50 line + we have a clear trend line support in force since the June 2012 lows

KOL Weekly Momentum Chart
Larger Image

So if we have bullish weekly momentum then there should be a bullish pattern.

Actually if we look at the price pattern from the end of May 2012 we can see that price has been establishing a base that could be unfolding an Inverted H&S and allow a large countertrend rebound with a potential target at the 0.618 retracement of the down leg off the February 2012 peak.

KOL Daily Chart
Larger Image

In addition we can make the case that price from the November 16 higher low has began a large impulsive wave (C) up with the first impulsive sequence completed last Monday

If this count is correct then the current pullback has to be corrective (So far it is to soon to confirm it).

The obvious (sweet spot) for a wave (2) pullback is located at a large gap up & 0.382 retracement = 25.14 - 25.03.

KOL Daily Count Chart
Larger Image

So this is not a buy now set up, instead it is worth monitoring the internal structure of the pullback and look for a reversal pattern as/if it approaches the gap fill of the rising trend line off the September low.


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