By Dan Eduard – For today’s technical tips, we will be looking at the ForexYard 8-hour chart for MSCI Taiwan. As will be shown, following a prolonged upward trend lasting several days, the CFD is overdue for a bearish correction.
The technical indicators we will use to support our theory are Bollinger Bands, Relative Strength Index (RSI) and Stochastic Slow.
1. As is clearly shown, the CFD is currently trading at the upper support line of the Bollinger Band. This typically indicates that a trend reversal is likely to take place in the near future. In addition, traders can see that the Bollinger Bands are beginning to widen, indicating a price shift is likely to occur soon.
2. If we refer to the RSI chart, it is seen that the CFD is currently trading well above the upper resistance line. Usually when we see an instrument this high in overbought territory, a bearish correction is imminent.
3. Finally, the Stochastic Slow provides us with confirmation of our original hypothesis. As is clearly shown, a cross has formed above the upper resistance line. This lends further support to the theory that a downward correction will take place soon.
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