JD.com (JD): Key Levels to Watch Amid Potential Breakout

27 May

For the Chinese stock JD.com listed on the Nasdaq, we observe a significant pattern. Initially, we had a prolonged sideways movement that concluded with an initial surge, establishing the current resistance zone. This zone held twice before the price fell through.

Starting from point X in our Elliott Wave count in November 2018, we saw a rapid increase of approximately 470% in a short period. However, this was followed by a steep sell-off, leading to the formation of Wave (2) within a trend channel.

The correction's time horizon places it in the perfect zone, typically between 2 and 2.618 on the higher time frame, which is a good indicator that this could indeed be Wave (2). To continue the upward movement, it is crucial for JD.com to flip this resistance zone.

The current question is whether the price will first return to the High-Volume Node Point of Control (POC) or break out upwards directly. Flipping the support-resistance zone will be key for any significant upward momentum.

We'll be closely monitoring these levels to determine the next move.



Zooming in on the 12-hour timeframe, we can observe the scenario at the end of the assumed Wave (2). This pattern is characteristic of what we like to see at the conclusion of Wave 2. Initially, we experienced an accumulation phase, which transitioned into a manipulation phase, followed by an expansion phase. This sequence is generally a positive sign.

Currently, we are witnessing a pullback after touching the resistance level. Despite this, we maintain our outlook that the price should continue to rise and not retest the $20 mark.

There's a breakout gap that partially filled but remains open near the bottom. This gap formed just before we entered the expansion phase, and it's a critical point to consider.

Given the ongoing volatility in the Chinese market and the uncertainty among investors, we remain cautious. We are closely watching how JD.com behaves within the $24.50 to $26.80 range. With a drop towards the gap close near $21, we will consider making significant buys.

If the price breaks out upwards, we will look for opportunities to enter positions.