Profits on BABA

From the last post on this trade we were looking at the potential for BABA to run to $185 or greater, which was the shaded yellow zone near the 50 -period moving average

The goal is nearly achieved.  But because its waning momentum I would think we are close enough to take profits. 

The origin of this sell-off from 4/3/2018 came in at maybe 0.05 to 0.25 from current price and that leads me to believe that the run could be in for a pullback, but if it goes even higher we can always move up the stop and close the position gradually. 

The Bigger Range in EUR/USD

Today we are going over some of the notes on this EUR/USD chart and the potential for a bearish continuation

The bigger green zone along the bottom of the price action created from the end of October last year to Mid-Novemeber was where most of the aggressive buyers came in to drive price higher @1.156 to 1.17

The sell zone above in yellow ranged between 1.25 and 1.235.  The size of each area is similar because it spans between 250 and 300 points

I have on here the 50 period simple moving average to indicate trend, and on the chart the first few times price broke above the 50 SMA confirmed and then retested support.  Price flew higher for several weeks until crashing into 1.25

At 1.0 - Price retested the moving average which acted supportive

At 2.0 - Price consolidated above and below with several closes in both directions, before ultimate break out above which fizzled quickly @ 1.2450

At 3.0 the series of lower highs is beginning to set in where the market is trying to create newer lows, price also is starting to flirt with the 50 SMA and possibly close below to confirm bearish sentiment

The Shift

The ground that I wanted to cover today is when a trend changes state, and where to determine reversals and continuations

• Charting involves adjusting for a higher low, but possibly 10-15 points higher
• Is the market neutral for the year, sell trigger?
• 1 hour time interval covers one month
• The change in market state to a more bullish tone
• Violations of a upward moving trendline and what the moving average is telling us

When newer highs are formed, I often remove the previous high and it no longer is relevant to that state of the trend.  In our case here, look at the shaded oval in green, it was a high, in a series of other highs that were formed, which were higher than the previous highs; the pattern is very clear

On the other hand, in this micro view (1 hour chart) it would seem like price is chopping around before resuming the uptrend, but at precisely the highs of today the market was just about unchanged for the year, and then in the final two hours the sell-off intensified wiping out the days gains.  Is it a sell trigger, there is a possibility  2662 to 2678 were really tough to hold (keep higher) and there is plenty of volume to go along with the selling pressure. 

One month:  Since 3/11 most of the selling was triggered at or below the moving average until it bottomed out between 4/1 and 4/2

The trendline, although loose, is still pointing higher, but price cut through it in a very aggressive fashion.  The moving average on the one hour chart is not saying much of any type of up or down trend, its just chopping around, but on the daily it paints a different picture.

Volume is increasing on a bearish day, and there is an intense rejection of the highs today right within close distance of the 50 period moving average on the daily chart. 

The 50% Pullback

I bring to the table points of view for both selling short and going long, the buy the dip mentality has maybe been shaped from the hundreds if not thousands of times stocks go up from competition over asset prices.

I am breaking down some points of interest with Facebook shares FB from the low of $72 to the all time high of $195.32

I believe the trend is down and that shares are going from expensive to cheap. 

How low can it go?

Why should there be a shorting opportunity, and is there deep value somewhere?

• Headline news pressure, Zuckerburg in the news brings to light some of the risks the company faces
• The fibonacci tool, marking the $136.66 the fair middle ground
• The magnitude of this move was 123 points and thats how far it ran
• The stock went up 171.28% and that was just since October of 2016
• Moving averages:  The 50 period simple moving average, and the slower sloping 225 period
• Former resistance becomes support 

From countless frames of experience I have seen the 50% retracement get touched whether its a bullish scenario and prices are ramping up off low prices.  I have also seen several tops eventually roll over, and rest at a 50% fibonacci retracement which is perceived as a deep value proposition.  

Price is below both moving averages:  the 50 and the 225, there is a gap above and I see that as a risk for shorts, that is to say that the gap could be filled at 175-178, but who knows really?

The other aspect of the darker blue 50-simple moving average is that it is pointing down so aggressively I take that as the sharpest indication of trend direction.  

So hitting a 50% pullback of this entire MONSTER move would account for 61.16 points of movement out of something which went up 123 points, its attainable even though it would look like a big stretch now.

At about 10/24/2016 shares of FB really hit a roadblock and that resist point should act as support if the force of the downtrend is powerful enough to bring us to $133.66

1/2 hour and the big picture

The swings in the S&P 500 are clear on this 30 minute chart.

Here are some of the technical points

• Supportive and Resistant Points/Boxes
• 50 Simple Moving Average
• Neither higher highs nor lower lows "locked"
• A trendline that is neither too tight or too loose

I set this chart to have buyers in the shaded regions in green and blue.  The more aggressive buyers came in the approximate 2560, and then the ones with less force "weaker hands" came in to drive prices up out of the 2580-90 territory in blue.

The yellow 50 simple moving average is as confused as this range, with a low of 2550 and high of 2670 the signal of price crossing through each time signaled bull or bear fairly accurately.

When we compare the chart from earlier in the week we can see that I started coloring HIGHER LOWS in blue and more are beginning to appear.

As the bears would interpret this chart, the lower highs coming in are also following a similar pattern, so its still a tug-of-war

Now, the slope of this trendline in black is subject to review because they can be broken quickly, and the other is the angle, it has 3 points of touch, and for the most part captures trend, but as I type price is right at 2642 which can mean any offering would drive it down and as a result invalidate the trendline.

It would seem really convenient to place a trendline and then at the moment you place it, it breaks, leading to a bearish resolution, but we can't plan or influence these things to happen.

Trade well!

Triple Screen Analysis on BABA

So this is meant to be more of a thought experiment

Let's take a look at this post in a few days, BABA is trading down relatively, on the week, and even this week so far has shaped up to be mediocre. Because of today's and this week's action, I suspect that a technical bounce would come off the 50 period simple moving average here on this first chart, it may even reclaim 175-177 when the market opens again

It trades up because of the Chinese comments. One set up in a resist point that will reveal itself tomorrow, but its fair to price in about a 2% bounce

I need to see how this pans out.

This is a weekly chart.

This is the daily chart with the zone where I anticipate it to trade (ADRs trade during American trading hours) it is also in line with the 50 simple moving average; and a great alignment of the two price points

Lastly we have the 4 hour chart

Its definitely primed to overcome the 50-period simple MA, and from this point of view, it would look like a gap up into the over head resistance area between 180 or higher could spell trouble if it doesn't hold and close above that hurdle 

Overnight gaps exaggerate and tend to burn out quickly in bear markets, the phase we are in is crucial now because we can either reverse and go higher or continue the moves down, which technically BABA is deeply oversold but for now I thought I would keep the momentum going in terms of showcasing bullish set ups that have a strong chance of working .   

S&P 500 - 30 mins

April 8th 2018

The part of this chart that jumps out most to me is the two blue underlying arrows for our recent 2 days of trading.  This is an appealing idea for whoever has a bullish bias, but little did some traders realize that on the way down, all the green arrows were like traps, getting people to add to a problem, that is to think you've called the precise low; but I feel with my experience false bottoms are more subtle.

One, I changed their color to entertain the idea that there could be a series of higher lows coming, and that being the next two "mini-bottoms" could buck a new uptrend on this time frame.

On the other hand, we are not sure of any follow through coming in from Friday's awesome sell-off.  Normally I can understand that a Fed announcement from Powell and a negative reaction on the day to jobs numbers would lead to some type of continuation the next day and week, especially for such heavy news items.

But as always, the future is not our to see, and I kept on the ????

The most powerful part of this chart is the 50 simple moving average shaded in yellow.  It is a beautiful marker of trend and as of the past month price has acted very well at following its downward pointing slope.  It was frustrating in 2017 to have such a gangbuster rally without much reversion to mean, and from my point of view it was harder to gauge when the pullback would happen.  We can always later on experiment with different types of moving averages like exponential and simple and see which ones on the daily revert to mean more frequently. 

This should be an exciting segway into the mid-April to May trading environment!