During Sept 2001 - Mar 2003, price made a lower low. DMI - Directional movement index made higher high for +DI (green) while -DI (red) made a lower high which is a bullish divergence for the index.
After about half a year of "squeeze" period in 2005 as shown in Bollinger Bandwidth indicator, DMI further crossed over with +DI moved higher and crossed ADX smoothing 14 period moving average (Black line) that shown the strength of the bulls
By May 2007, warning has started to emerge again. 1st BBW enter into squeeze mode indicating a period of consolidation. Price made a higher high compare to the high in April 2006. However, +DI made a lower high while -DI which is illustration of bearishness was making high high. That was the bearish divergence that resulted in the index crashing.
Aug 2010 - Nov 2011 depicted the longest squeeze in BB and BBW where the index was trading in a range.
Now, May 2013 - present,
Nikkei 225 has made 2 higher high, but +DI is not! and if +DI is not able to cross above the black line and -DI which is the bearish directional index started to make another higher high, i would tend to associate the break out and gap up of long term downtrend line as an exhaustion and bull trap. Using BBW as a guide, it depicts that "squeeze"/consolidation is happening again though the duration of this squeeze remain unknown. The only disadvantage of BBW is the inability to specify whether price would go up or down, just letting me know once the squeeze is over, direction will follow.
Monthly candle is not completed yet.
I promise Part 3 on 1st Dec.
After about half a year of "squeeze" period in 2005 as shown in Bollinger Bandwidth indicator, DMI further crossed over with +DI moved higher and crossed ADX smoothing 14 period moving average (Black line) that shown the strength of the bulls
By May 2007, warning has started to emerge again. 1st BBW enter into squeeze mode indicating a period of consolidation. Price made a higher high compare to the high in April 2006. However, +DI made a lower high while -DI which is illustration of bearishness was making high high. That was the bearish divergence that resulted in the index crashing.
Aug 2010 - Nov 2011 depicted the longest squeeze in BB and BBW where the index was trading in a range.
Now, May 2013 - present,
Nikkei 225 has made 2 higher high, but +DI is not! and if +DI is not able to cross above the black line and -DI which is the bearish directional index started to make another higher high, i would tend to associate the break out and gap up of long term downtrend line as an exhaustion and bull trap. Using BBW as a guide, it depicts that "squeeze"/consolidation is happening again though the duration of this squeeze remain unknown. The only disadvantage of BBW is the inability to specify whether price would go up or down, just letting me know once the squeeze is over, direction will follow.
Monthly candle is not completed yet.
I promise Part 3 on 1st Dec.
