BABA - Dumb Money Trap On Good News?

BABA

A little bit of devil's advocate here and to be clear; my high time frame bias is that BABA is in either beginning Mark Up bull market or it is in the latter phase of accumulation.

BABA has been in a long term accumulation drifting sideways out the pitchfork over the last few years.

And we have identified the bullish bowl shape in previous ideas.

Chinese stocks such as BABA have had a big lift as positive news of government stimulus measures were reported.

But when good news arrives, what does it bring into the market??

Dumb money.

And what do market makers do to dumb money??

They shake them out / trap them.

So this isn't an obvious chart pattern, but it is worth noticing that BABA is @ 1:1 Golden Window here and so a 3 wave correction may be completing.

Remember that 3 wave upside corrections are very common in accumulations before the real uptrend.

BABA has been asleep for ages but suddenly it wakes up and all the fanboys rush in on good news.

Worth noting also that BABA is now oversold on the day time frame for the first time since 2023.

So technically this is not really an obvious 3 wave correction because it is a bowled shape and they can lead to very bullish action.

Psychologically however, this is an ideal place for a shakeout 😅.

If the top was in here then it may get back to the 0.618 @ $77.06.

This is why as I always say it is good to buy in the sideways drift.

There is nothing wrong with buying up here with higher time frame bias, but lets see how this plays out 🤔.

If it does get back there is, it will be a great dip buy opportunity...

Not advice

Note

Note

Don't forget to BOOST / Comment - it gets the idea up the lists - thanks.

Note

BABA

Moved beyond the 1:1 GW in reflection of Hang Sang bursting higher today.

So this is looking strong but I think it is moving too fast to be stable.

And so we may see some significant whipsaw in the pipeline.

I think there is a reasonable chance that this will continue up to the 1:1.618 Golden Window ($117 - $124 and pivot in that area.

The 200 week MA is up there is so that is a major higher liquidity target which increase the chance of a reversal.

If it gets there and pivots it is still a 3 wave correction.

And as such it can come all the way back to the 0.618 retracement which would be somewhere around $84.

So this is good to hold for now; especially if you bought deep and I will take some or all profit when it hits the 200MA / 1.618.

Lets see how it develops 🧐.

Note

BABA topped exactly at the 1.618 @ $118 as I suggested it would when it was down at $104.

If you decided on the shorter term play and took some profit that may have been a very good move.

In higher time frame this looks like a great buy and hold.

And there is a chance that this is a major uptrend already underway.

But similar to Hang Seng (client only) it is not an easy call at this juncture.

If Hang Seng does hold then this may go rocketing up from this area.

But if Hang Seng prints another long correction then BABA may get back to the 0.618 @ $83 😯.

Note

BABA

Alibaba might be a leading indicator for what happens next with Hang Seng index.

Now down 13% after scraping the 1.618 extension.

Obviously if you were savvy enough to take some profit there, it was a GREAT decision ✨.

This could yet be a retracement as part of of an uptrend.

But its starting to look more likely that it is a 3 wave upside correction.

And if you've been paying attention you'll know that if it is within a high time frame accumulation then the most common area for the next pivot low is the retracement Golden Window (0.618 - 0.786).

And its certainly not impossible that it could continue on down to lower lows or even go all the way home to SC "Selling Climax" support to make a ST "Secondary Test."

I think that is somewhat less likely because its been a very tidy bowl accumulative build up.

But if Hang Seng gets stuck in another long correction down and down then it might do.

I'm playing the long term game on BABA and if it goes lower then I will buy some more then let it run.

That said if you are more aggressive, this is a reasonable short here, but quite deep so there is some danger of sudden pump action.

But right here, momentum looks quite strong to the downside.

And the "dumb money trap" may now be in effect with new buyers getting trapped up high🤨.

Note

HK50 thread relevant to BABA:

Note

As I said on the HK50 thread, if you took any profit on BABA when it hit the 1.618 @ $117.8 then you're in dreamland now.

Note

As predicted, the "good" stimulus news turned out to be a dumb money bull trap.

Now all those "traders" rushed in to carry the bags from the top.

Its funny how often this game plays out.

BABA is tumbling as Hang Seng turns bearish.

Already close to my 0.618 $83 dollar target.

I am starting to consider that BABA may re-test $58 low.

Note

BABA

Is just the same as Hang Seng but less volatile.

It may find a way to hold and it has now hit my 0.618 first target.

In the end this area will all be deep I think...

But yet we do want to get the best discount.

As I have been saying, if you bought in the sideways passage of $70 - $85, then you may elect to keep it simple and hold.

And this may find a way to settle and that still be a great high time frame investment.

But that aside, i think the most likely outcome is that it trickles down to SC support where the highest liquidity is to form Wyckoff ST - Secondary Test.

That would be the dream buy opportunity.

dRends35

Your FA guru can't read a chart💭

I run a technical group with lots of content every day + regular videos, 1:1, chatroom 🚀.

Better than all the rest? My record speaks for itself 💡.

Telegram Group: $50 per month✨.

Contact: t.me/dRends35

Also on:

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.

dRends35

Also on: