FXP Long Idea

This one looks close to making a move, FXP moves inversely to the market directionally so a decline in the market should send FXP (2x Short China FTSE 25) higher.

Here are a few charts I like, although generally speaking, market updates are useful for FXP even if they don't mention it because as I said, FXP moves directionally with the market most of the time, but in the opposite direction so market down, FXP up.

 Daily chart has a typical Technical Trader trap, in this case a descending triangle that easily sets up a bear trap, when the bear trap reverses, the momentum from what would be shorts covering (in this case they are simply in the inverse ETF, FXI) gives the stock momentum. A failed price pattern like this will also atract longs who reverse their trade as TA teaches.

The core of the trap is this, the descending triangle is a bearish consolidation/continuation pattern, it's continuing the preceding trend which was down. When price breaks below the patter's support, longs exit (shorts could enter or just use FXI), but it's easy to see the set up was successful just by looking at volume on the break below the pattern's support. This is what Technical Analysis teaches traders, this is textbook so they don't argue with it, they go for it (longs may have sold-shorts could have entered).

In my experience a head fake move is relative to the size of the trend so just looking at the triangle I know a head fake move is going to be more than a day, but I believe the yellow area is a had fake move and nearly done, if not done.

When a Technical pattern like this fails (as price moves above resistance of the pattern) Technical traders are taught to close their short and go long as the failed pattern is reason for them to reverse their trade which adds upside momentum to FXP as it crosses resistance around the $20.36 area. The brea below support (now resistance) caused a large flood of orders, all supply which makes it very east for smart money to accumulate FXP in bulk as no one questions smart money buying at this opportunity (lower prices and all the supply they could ask for), in fact just the opposite, trader's believe it is smart money who is selling, but they don't sell in to weakness and they don't sell in size that creates more weakness unless they are REALLY desperate. Because Technical retail traders have it all wrong, they NEVER suspect that all that volume/supply is actually being accumulated, they assume it is being sold by smart money and this is why they don't question smart money accumulating here.

 My custom DeMark inspired indicator with sell and buy signals, currently on a buy signal.

 On a 60 min chart, my Trend Channel identifies the trend and shows where the change in character occurs that will likely lead to an upside move, right above the channel at $19.18, when this is crossed, there will be a change of character of at least 2 standard deviations, changes in character precede changes in trend.

 30 min 3C with confirmation in green, negative divergence in red that sets up the break below support and a leading positive divergence on a 30-min chart over the last 2 days alone.

 15 min with a relative positive followed by a leading positive as is almost always the case, the relative positive is the start of accumulation, the leading positive is accumulation really picking up and much stronger. Just as smart money sells in to strength, they buy in to weakness. We want to do the exact same thing, but because our positions are small we can enter all of it at once, their positions are large and must be broken up in to smaller orders so no one knows what they are doing including other smart money firms and predatory HFTs that will look for these large orders broken up, they call them "Icebergs" because only a small tip of the order is seen, but if they can find enough orders they know there's something bigger below the surface, just like an iceberg and just as NYSE specialists or NASDAQ market makers do, although illegally, when they know there's a large order that will send a stock higher or lower, they front run it with their own orders to piggy back the large order; for specialists and market makers who also trade their own accounts in addition to filling these orders, this is illegal, but happens all the time. For HFTs this is not illegal because they don't have to follow the laws a market maker/specialist has to, so they front run the order and make the accumulator pay more for the shares, in effect they become the ones selling the shares to the large institution, this is why the institutions have to be so quiet about what they are doing.

 10 min is leading

 5 min is leading with the head fake area at the yellow trendline.

3 min leading.

Since the longer term charts are already positive, it just needs the short term charts to fall in line, these are the positions that will be like a capacitor, charging the move to get it going or jumpstarting it.

FXP should be a good long position that will give you short exposure to China if you need to diversify your portfolio a bit.