It's been a better year for shareholders of China Mobile (CHL) -- the biggest cellular carrier in the People's Republic has rallied around 13.4% so far this year, falling short of the S&P, but also dramatically beating out most Chinese stocks for 2012. Like MCD, China Mobile looks primed for a move higher right now.
That's because CHL is currently bouncing higher within an uptrending channel. In short, an uptrending channel is a sloping price range that's bounded by a trendline support level and a trendline resistance level. The channel is a big benefit to investors: it provides a clear picture of CHL's likely price action as the stock bounces higher off of support and bounces lower off of resistance.
For an uptrending channel, the optimal entry point comes with a bounce off of support. That's not just because shares have the most room to run before hitting resistance - they also have the least risk. Since a breakdown below support means that the channel is no longer valid, buying close to support means that you know if you're wrong quickly. As a result, the most logical place to put a protective stop is right below that support line.With CHL catching a bid this week, now's a good time to buy as long as you set your stop from the onset and you're comfortable with that risk level.
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