- Learn how to buy JD.com Stock using the price action technique that allowed George Soros make tons of money out of the markets!
- Too many traders fall into the trap of thinking that charts can predict a stock’s future.
- Get an idea of what kind of players are actively participating in the market.
A lot of investors look down on technical analysis. They see it as some kind of voodoo that doesn’t work. But that’s ignorant…
Because if you want to be a successful investor then you need to use every edge you can get your hands on. One of the greatest investors of all time, George Soros, understood this very well.
In his book The Alchemy of Finance, George Soros gave us an example of when he struggled to understand the macro forces driving the German mark. His solution was to turn to the technicals to find established patterns that would help him understand where price could possibly go next.
The German mark seems to have established a pattern that consists of a sharp rise, an equally sharp break, and a halfway retracing of the decline followed by a period of consolidation.
If the pattern holds, we ought to be at the bottom end of the second break. That would fit in well with my economic scenario. If the pattern is broken, I shall have to cut my exposure in half until I can reassess the economic scenario.
Too many traders fall into the trap of thinking that charts can predict a stock’s future. But that’s wrong.
Charts only show you what’s already happened, not what’s going to happen. What they do is give you a real-time look at the buying and selling pressure in the market. With that info, you can get an idea of what kind of players are actively participating in that market.
This will help you get a feel for what the institutions are up to. You can see what price levels they’re buying and selling at.
So let’s apply this concept to one of our favorite stocks, JD.com
But remember, technical analysis should only be used in conjunction with fundamental analysis. One without the other is an incomplete method. And in JD's case, we're very bullish on the company from a fundamental perspective. To review our fundamental thesis, please watch our previous video below:
The chart below shows that since JD went public a little over three years ago, the tape has been repeating a distinct pattern. The pattern is of a 6-wave coiling wedge followed by a 3-wave thrust higher. Chart below is a weekly. JD now looks to be completing its third 6-wave coiling wedge. As you can see, each wedge has become shorter and tighter than the one that preceded it. This is called a fractal, where price action develops in identical patterns but over different lengths of time.
You can see the latest 6-wave wedge more easily on the daily chart below.
And if the standard pattern holds, we should see a 3-wave price thrust higher soon.
Now this pattern we’re seeing isn’t a guarantee of where JD.com’s price will go. But it does give us an idea of where it could go. And it also tells us that this may be a good area to either add to or establish a new position.
Watch the video above to learn more!
And remember to stay Fallible investors!
This article was written by
Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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