Trade Idea -MPEL (Short)

MPEL is one that just popped up on one of my scans. As you can see there's plenty of downside for MPEL so no need to rush in to the trade. 

 RSI was healthy through 2010 and in to 2011, making higher highs with price, but the recent parabolic move up (red rectangle) is a red flag as is RSI's failure to make a new high with price, which is an RSI negative divergence.

 MPEL saw 9 consecutive days of higher highs and higher lows, no noise in the trend which taken with the parabolic rise, probably indicates some short squeeze has taken place.

 On an hourly chart, the linear regression channel sent up a red flag around 6/30 when prices moved to the upside of the channel, this type of activity, although seemingly bullish, often precedes a break of the LR channel as we see today on increasing volume. Both MACD and RSI which had been bullish and moving up with price, both went negative around July 1st. The next day a hanging man (bearish reversal candle) candlestick was put in followed by a star (indecision candle). A star forming after such a strong uptrend is another red flag.

 On the 15 min chart, one again MACD and RSI went negative as MPEL tested the 7/5 highs.

 The 30 min 3C chart has worked well in the past, calling a negative divergence at the late May highs, it's currently in an ugly negative divergence.

 The 10 min chart which had already gone n to a negative divergence at the 7/5 highs grew worse on the 7/7 test of the highs.

As for the trend reversing, there are many ways you can enter this trade, the swing method I've been talking a lot about this week would show a trend reversal with a closing candle in which the high is below the signal candle's lows (at the red trendline). If and how you enter the trade is up to you, there may be a snap back bounce offering better positioning, but even if you wait for the swing trend to change, as I pointed out early in the post, there's a lot of potential downside for MPEL.