Vale Trade Idea (Short)

One of our members brought this one to my attention today, it's a mining play on China and it appears that 60% of their revenue stream is from China, plus the fact it already appears to e in trouble, it looks like a decent candidate on a nice tactical set up.

 This is a 5 day chart of VALE with a 50 bar moving average, note MACD and RSI are both negatively divergent .

 Here's the daily chart showing a top and a descending 200-day moving average, typical of a primary bear market. The top has already broke and saw the typical volatility dance so it looks to be pretty timely as well.

 This is my custom cumulative volume indicator on a 5 day chart so it is easier to see, the volume confirms a top as the volume dries up on rallies and increases on declines.

 This is my cross-over screen with a custom indicator and RSI to avoid whip saws or false crossovers, the signals have been good with two long and a current short signal, nice and clean.

 Money Stream is also in a daily negative divergence, which is now leading negative.

 The long term 3C 6 day chart shows confirmation in green and negative divergences in red, currently it to is in a deep leading negative divergence.

 All of the other timeframes are negative as well, the hourly...

 The 30 min

 The 15 min

 So now if you like the trade, it's just a matter of a high probability/low risk entry and the 1 min positive divergence may give us just that.

There's a gap in yellow, the positive divergence in the 1 min hart may move VALE in to that gap area, gap resistance tends to be some of the strongest resistance so  wouldn't anticipate a move above the yellow area, but if we an get a short term negative divergence on a little price strength, we may have the entry we are looking for in VALE and have a short that plays not only mining, China but Brazil as well.

The top formation's implied price target is $11.00 but these often overshoot to the downside and the 2009 lows are around $9.00, a break of those lows could lead to additional downside.

Put this one on your radar and email me if you have questions.