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05/04/2021 |

$BABA Monthly Candle Case Study: Complementing Technical Analysis with Seasonality & Analyst Estimates

We are sure that all have heard that learning to trade using technical analysis is the easy part, but mastering one’s own psychology being the biggest obstacle to profiting in the stock market. We all know this to be true, yet in secret shame, many make the same emotional misjudgments over and over. We absolutely sympathize concerning this dilemma; as within many other aspects of our lives, it is hard to recognize inner and outer influences which affect our decisions. It is this point which is one of the goals of the team at TrendSpider, which is to provide automated charting tools that help to reduce the noise in our heads and emotional biases that lead to bad trading decisions. In this case study, we will look at $BABA (Alibaba) and how TrendSpider’s Dynamic Alerts, which go beyond simple bells on horizontal lines, can help mitigate the psychological dilemma known as FOMO.

$BABA Monthly

$BABA chart.

This is a monthly chart of BABA showing a very strong uptrend since the 2015 lows with price bouncing almost perfectly off this support trendline six times over the last five years. This chart also highlights strong seasonality into May over the last five years with strong analyst ratings recently as well shown at the bottom of the chart.

  1. This number shows the most recent test of the long-term trendline that started back in mid-2015. So far, into the beginning of May of 2021, the price seems to be bouncing nicely off this area after a Doji candlestick formation for the month of April.
  2. This number shows recent analyst “buy” ratings that have come in over the last few months. You can also see that there has only been one “sell” rating over the last five years which was back in May of 2017. The analyst ratings have been very accurate for BABA over the last several years and seem to be a good indicator of further moves to the upside, in this particular case.
  3. This number shows historical seasonality for BABA over the last five years. The reason we are looking back and measuring seasonal trends since January of 2016 is because this is the point at which price put it a final low before starting the new uptrend BABA has been in ever since. This tool allows users to complement their technical analysis with seasonal trends. In this case, BABA is bouncing off the long-term trendline support with an 83%-win rate for the month of May, the second strongest month after July with a 100%-win rate.
  4. This number shows an active alert on the long-term support trendline for a breakdown using the dynamic alerts on TrendSpider. This allows traders to stick to a plan as well as manage risk when these levels break down without having to stare at the screen all day. These alerts are sent to you via email and text message.

As mentioned above, $BABA’s price has respected the trendline consistently over the last 5 years, creating life-changing profits for many traders who entered on the test of the supporting trend line. Using TrendSpider makes it easy to not miss opportunities like this by using our Alert Sensitivity Functions. Set the sensitivity of the alert within a +/- price range to be notified as the price meets or nears your conditions. Not only can alerts be set on simple trendlines and support and resistance levels, but also based on conditions you can decide in combination with many other indicators, using our Multi-Factor Alert Function.  Sign up for our free 7-day trial and see how TrendSpider can help alert functions can help you.

User Guide: Multi-Factor Price Alerts