August 21 2009 – Divergence take its toll

ASX Commentary

August 21 2009 – Divergence take its toll

Fri, Aug 21, 2009

The market got thumped today mainly because China announced that it was reeling in the lending criteria by banks. There is even suggestions that banks need to sell shares to lift capital adequacy ratios. This was enough to spook local traders but it also comes hot on the heels of the weakening technical patterns being built since last Friday. We’ve warned all week about the Type-A bearish divergence and longer term readers will kow that its a keen reversal signal that rarely fails. The last two days have also seen very weak closes suggesting sellers were at work. The daily trend is now flat. Daily momentum remains up, but barely.

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This post was written by:

Nick Radge - who has written 899 posts on The Chartist.

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