FXP Trade Idea Follow Up: Short China

It has been a while I've been watching FXP (FTSE China 25 Ultrashort), China hasn't been behaving well and it has made entering FXP difficult at a reasonable area with lower risk, but since these defaults, there's this air going around that China's Central Bank (PBoC) will stimulate the economy, I don't know why as the PBoC hasn't said anything along those lines, in fact the opposite, but for now, it's doing wonders for a FXP long position which has been on the watchlist all year (2014).

Here's what I'm looking at, I think you could probably play a short term bounce or build a position, I'm not ready to jump in yet, I don't think the stimulus rumors will go away that quickly and therefore I think with some more patience FXP can be had at better levels, but I would not be opposed to building a position there so long as the phasing in is part of your risk management plan BEFORE you start entering.

 Here's the longer term base which is impressive in FXP (short China 2x) and it really is just getting started. The recent pullback to the trendline grabbed my interest and if you look close, today's DAILY candlestick thus far is a bullish Doji Star (upside reversal). If the volume for today's daily candle surpasses Friday, there's an excellent chance this bounces over the next day or so up in to the gap in orange around $77.50, but I think if you are patient, we can get in below the trendline.

Either way, if you are interested, I'd be setting price alerts to remind you.

 My O-Over screen on a 60 min chart shows the long signal and the recent pullback, I don't think this will go long on a short term corrective bounce in to the gap so as far as waiting for a better entry, this screen should be helpful.

Here's why I think there's a very short term gap fill and a deeper correction after that which is where I want to get involved.

 The 5 min FXP chart shows the negative where the pullback started and a pretty decent positive, that can take FXP in to the gap, but I don't think it will go too far from there, here's why.

The 30 min chart is calling for a deeper correction, 2 days isn't enough for a divergence this size, this should be the largest correction this year so after that gap is filled (assuming it is which is probably a realistic assumption), I think we move BELOW the trendline, that will create supply that institutional money can get involved with.

So once again, if we see the daily volume today pick up above Friday's and the Doji star on the daily for today remains intact, there's likely a short term long trade in to the orange gap area, then I think we move lower below the trendline and that's where there should be some real accumulation, great entry prices and much lower risk. This looks to be the best China opportunity of 2014 so far and this is an area I want exposure considering what''s going on there with the real estate bubble, credit collapse, etc.

This is one I REALLY like.