BABA swing Theory
First, on some visuals:
Fibonacci extensions used as levels.
Green boxes visualize un-filled gaps created on downward action.
Daily trend line (blue) as longterm support although I don't anticipate this coming into play nearterm.
Purple trend line descending from highs show current downtrend and would function as a decent trigger for a swing entry LONG targeting upside fib levels and gap fill targets.
I've mapped out a general idea of how this theoretically could play out with the pink arrows
1. First theory, a downside test of support before breaking out and legging up
2. Just go straight for the cake (not drawn, but generally speaking its the upside action without the base test first)
What do we have going for us?
1. We are already looking at a 33-34% drop from the highs set in October 2020
a. Does this mean we deserve a rally or new uptrend? Absolutely not, however if we are to zoom out we see the stock is still creating higher highs and higher lows. With the spike in volume and price on Apr 12th, frankly I don't see this taking another visit down to excess lows (220 etc.) to gas up for a new leg. I think we are seeing it.
2. April 12 massive bullish engulfing candle on 2-3x typical daily volume. We are now printing 4 inside trading days, all of which have been on anemic levels. This feels like a safe base and would use the min/max of the April 12th candle to give you a nice idea of a reasonable trading range as it continues some sideways action until breakout time.
3. FY 21 earnings for BABA report April 30
a. Already seeing volume in 250, 255, 260 strike calls for Apr 23, 30th "follow the money"
b. China's economic data released, especially retail figures, imply that BABA will just blow earnings out of the water - expect a ramp up into the leading week(s)
I'll be swinging some calls, the date/strike I'll withhold.
Although if I were a smarter man, or a smart man at all, I would say wait for the breakout instead of front-running the move. I do expect next week however to confirm or invalidate the breakout theory.
Fibonacci extensions used as levels.
Green boxes visualize un-filled gaps created on downward action.
Daily trend line (blue) as longterm support although I don't anticipate this coming into play nearterm.
Purple trend line descending from highs show current downtrend and would function as a decent trigger for a swing entry LONG targeting upside fib levels and gap fill targets.
I've mapped out a general idea of how this theoretically could play out with the pink arrows
1. First theory, a downside test of support before breaking out and legging up
2. Just go straight for the cake (not drawn, but generally speaking its the upside action without the base test first)
What do we have going for us?
1. We are already looking at a 33-34% drop from the highs set in October 2020
a. Does this mean we deserve a rally or new uptrend? Absolutely not, however if we are to zoom out we see the stock is still creating higher highs and higher lows. With the spike in volume and price on Apr 12th, frankly I don't see this taking another visit down to excess lows (220 etc.) to gas up for a new leg. I think we are seeing it.
2. April 12 massive bullish engulfing candle on 2-3x typical daily volume. We are now printing 4 inside trading days, all of which have been on anemic levels. This feels like a safe base and would use the min/max of the April 12th candle to give you a nice idea of a reasonable trading range as it continues some sideways action until breakout time.
3. FY 21 earnings for BABA report April 30
a. Already seeing volume in 250, 255, 260 strike calls for Apr 23, 30th "follow the money"
b. China's economic data released, especially retail figures, imply that BABA will just blow earnings out of the water - expect a ramp up into the leading week(s)
I'll be swinging some calls, the date/strike I'll withhold.
Although if I were a smarter man, or a smart man at all, I would say wait for the breakout instead of front-running the move. I do expect next week however to confirm or invalidate the breakout theory.
Note
4/19 update:approx 30 mins in market open Monday - downside level being tested. Unless this daily candle closes above 238 this play would be invalidated and instead would think that we see a gap fill below. I still think we pull up back into the safe zone by EOD however we have no crystal balls here - time will tell!
Note
Realize the above comment likely needs some context. I'm saying that a daily close above 238 would keep the daily candles as 'inside days' from April 12th move. Otherwise a daily close below would be a convincing downside breakNote
I would be cautious here, with the daily close under 238 I see more reason to believe we fill the downside gap before any upside can occur. The only exception I can imagine would be a news-based catalyst for the company, or a pre-market gap up to bring back into range.Note
Gap filled, possible 2nd gap below to 225 that may still need to fill, otherwise we may start seeing a reversal here nearterm.Note
Yesterday closed as a gravestone doji, great prospect for reversal. So far we are seeing a nice bullish followup. I'd like to see a daily close near Tuesday's high and we could safely nibble on some calls (or shares)
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Les informations et les publications ne sont pas destinées à être, et ne constituent pas, des conseils ou des recommandations en matière de finance, d'investissement, de trading ou d'autres types de conseils fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.
Clause de non-responsabilité
Les informations et les publications ne sont pas destinées à être, et ne constituent pas, des conseils ou des recommandations en matière de finance, d'investissement, de trading ou d'autres types de conseils fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.