Shopping The Cup and Handle in 58.com

I have no idea what that logo means in Chinese, but the smile is cute isn’t it? The Chinese company 58.com ($WUBA) operates an online market place allowing local merchants and consumers to connect, share information and conduct business. Kind of like the Craig’s List of China.

The stock took a beating in June after making a tower top. It fell from a high of 82.50 back to 40 in just 2 months. But it is now starting back higher. And along the way it is smiling back at us just like the company logo. Perhaps it is time to buy?

Halfway through the 2 month downward move the stock paused and bounced briefly to 68. It then gapped down and continued the rest of the way to the bottom. The rounded move higher went all the way back to close that gap last week, as it consolidated. This represents a Cup and Handle pattern. The target of the pattern on a move higher is a price of 91. This comes into play on a push over the 65 level.

Momentum is strong as well, supporting more upside. The RSI has worked off an overbought condition while the MACD is moving level as it crosses. It also appears a Golden Cross, with the 50 day SMA crossing up through the 200 day SMA should happen soon. Watch for a move over the handle to participate and you will be smiling too.

This post was originally shared at DragonFlyCap.com