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How To Trade the Cup With Handle Family of Trades

I have pointed out a couple of strong Chinese Stocks to watch in the last few days. MPEL and BIDU both have very strong fundamentals and both have recently broke out of Cup with Handle Patterns. BIDU broke out Thursday March 6, 2014 and made a huge run-up on strong volume.  Notice the long green candle in the chart below. There are two reasons why it had a down day the next day.  The first is that when a stock makes this large of a run-up on breakout it is an over-reaction and will most always correct back some the next day. The second reason is the NASDAQ had a down day yesterday. There is a third reason I will tell you to watch for after I tell you about MPEL.

 

Baidu Inc.  (BIDU)

 

Melco Crown Entertainment Ltd (MPEL) broke out of a Cup with Handle pattern several days ago and was looking good until yesterday when it made a big pull back. This was done on very low volume and was probably caused by traders taking profits after some good gains. Melco Crown Entertainment Ltd is very competitive with Wynn, Las Vegas Sands, and MGM in the Macau, China gaming and hotel industry. They all took a hit yesterday on below average volume. Which further indicates profit taking.

 

Melco Crown Entertainment Ltd  (MPEL)

 

These two stocks need to be watched closely as they may serve as forecasters of an upcoming Bear market if they should continue in a downward trend. If they start to approach the Pivot Point Trendline then those of you that have the CupTrade Strategies need to load the #ReversdCupWithHandleTradSE strategy to catch a Short Position. These are powerful trades at the beginning of a Bear market and will make good profits as it will move down fast. If it doesn’t cross below the PP Trendline the trade will not be entered so you will have nothing to lose. More than likely this is just the stocks taking a small breather and will continue to climb. They are very strong stocks so if they do fail it will tell us a lot more will be joining them. Use the indicators you received in the CupTrade Package to assist you in your decision making process.