MCP: Potential Breakout

Melco Crown Philippines

MCP is now on a potential breakout from both the 4-month downtrend line and the Inverse Head and Shoulder pattern supported by good volume with measured targets at 2.8 and 3.5 respectively.

*The 15-month downtrend line has been broken already.
*MCP bottomed out already at 1.15.
*ADX still points to a weak trend and more of a sideway price action (consolidation).
*No buying pressure yet (Chaikin Money Flow).

Previous MCP chart update containing this potential Inverted H&S pattern can be found here:
http://psetrends.blogspot.com/2016/02/mcp-chart-update.html

Trading Plan
- Buy near the breakout area.
- Set target depending on the breakout pattern (2.8 for the downtrend line breakout and 3.5 for the Inverted H&S).
- Set the stop-loss just a few points below the right shoulder's low (1.86).
- This is a high risk trade for the downtrend line breakout play as the risk/reward ratio is very small (around 1:1). Around 1:2 risk/reward ratio for the Inverted H&S breakout play.

MCP: Chart Update

Melco Crown Philippines

MCP recently found a roadblock at the convergence of multiple resistance levels.

The Head-and-Shoulder Bottom pattern (Inverted H&S) remains valid for now. The neckline is also the immediate resistance area around 2.34. Immediate support at 1.86.

• A breakout from this H&S pattern will have a measured target around 3.5.
• Breakdown from support with price action moving towards the H&S head area will likely invalidate the Inverted H&S pattern.

Recent rally is still considered a DCB (Dead Cat Bounce) from the longer term downtrend line if it fails to break that trend.

If major support at 1.15 holds up from a sharp correction, potential Double-Bottom pattern will likely develop. A breakdown from 1.15  will confirm the DCB and price action will likely move towards new lows.

Note
This is just an update from the previous post "MCP: Potential DCB":
http://psetrends.blogspot.com/2016/02/mcp.html

Trading Plan
- Avoid for now.
- Buy only the breakout from Inverted H&S if it also breaks the longer downtrend line supported by above average volume.

MCP: Potential DCB

Melco Crown Philippines

MCP's recent rally is now approaching its 1-year downtrend resistance line. Failure to break this trendline will mean another DCB (Dead-Cat-Bounce) for MCP.

*RSI now comes off from Overbought territory (technically using a downtrend bias overbought threshold at around 55~60). This is basically a bearish bias pattern.

Trading Plan
- Avoid for now (buy only on breakout that is supported by huge volume).
- If currently holding MCP, potential profit taking area near the downtrend resistance line (or scale down position to protect some gains).