BABA Follow Up

After our original post 11/10 in which a change of character really does lead to a change in trend, at least consolidate at the very least and in which price action of a Channel Buster can be predicted over a week in advance, we are now at the point of the original post although some of you traded the smaller moves. The point of the original post was to see if BABA was still going to have the strong underlying signals it has had after a stronger than usual Channel Buster pullback...whether BABA is a potential pullback long or if things maybe are changing for BABA's overall trend.

Here's where we stand and the next area/s that will be defining in a BABA trade, I sure wouldn't have wanted to be anything but a very short term traded in BABA these last 2 weeks and I know of at least 1 member in which the post saved her money.

Here's where we are now...

 In yellow is BAVA's 'seemingly" bullish increase of price ROC to the upside, breaking out of the Channel a  red flag as these almost always quickly break to the underside of the channel, which is what we expected the first post covering BABA before the first day of pullback.

 If BABA pulls up to the underside of the channel at the yellow arrow and gracefully backs off, there's a good chance it forms a stable base and makes an excellent pullback trade, there hasn't been so much damage that this kind of pullback long is ruled out. However if it enters the channel, chances are things will get ugly and it may turn very ugly which may be the start of a whole other trade we are yet to consider. There will be stops and limits in the channel, that you can be sure of (red arrow).

 The 60 min chart which was PERFECTLY in line right up until our first post showed the first divegrence of the entire trend after our Channel Buster, negative. There's a slight leading component, but again, this isn't damage that can't be repaired with a wider "W" base/pullback to the recent pullback lows, thus perhaps making a strong case for a long position.

 Near term charts seem to suggest there's a move higher, but whether to the bottom of the channel or inside the channel is not clear as of yet as the divergence for the move higher is not large. I do not think this is a pullback divergence that has already occurred for a new long position, I don't think there's a stable enough base after just having underwent a Channel Buster pullback of at least-9% or more.

This is an approximation of a daily Trend Channel for BABA on a 60 min chart since there's not enough data to construct a daily trend Channel yet, it has broken on this strong trend so this does argue for a change in trend, however there's often increased volatility (even more than the channel buster) before that happens and BABA may still make for a profitable long, at this point it depends on whether the channel offers gentle resistance and allows it a constructive pullback for a larger base.

I'd set price alerts if you are interested in BABA near the pullback lows as well as inside the channel.

I'll be setting those alerts and seeing how BABA acts at either area, inside the channel with poor underlying trade and BABA becomes a swing short. Otherwise it may still have the capacity for a nice long trade on a stronger base, but I would not trade it long on such a narrow base siuch as what's in place now.