Li Auto Inc (US: LI) technical and wave theory suggest further upside especially the final 5th wave of the minor phase has yet to complete:
- From the wave perspective, the wave 3 is considered an extended wave 3 and as such, the 5th wave is yet to complete after prices broke out of the falling wedge of wave 4. However, we shall not discount the fact that a complex flat might take place should the immediate resistance zone from US$36.75-US$39.60 rejects before a strong break.
- From the price action perspective, the stock has formed a bullish engulfing candle near the resistance zone, hence we are waiting for the breakout of the resistance zone for confirmation.
- Ichimoku indicate that 2 out of 3 of the “Sanyaku Kouten” has formed, pending the senkou-span A to break above B. However, do take note that the “Sankyaku Kouten” signal will be a weak signal as the bullish engulfing has broken slightly above the cloud. Also, the sequence for Tenkan-Sen crossing and Chikou-Span breaking above the candle moves simultaneously.
- Stochastic is moving towards the overbought line at 80, hence there’s room for more upside. Besides that, the 2 line of the Stochastic are diverging away, hence indicating a strong momentum ahead
*Timeline of the trade is 3 weeks from the date issued.
CHART LEGENDS
Ichimoku Kinko Hyo
Red dotted line = 9 Periods Tenkan-Sen
Blue dotted line = 26 periods Kijun-Sen
Green Line B= 52 periods Senkou Span B
Pink Line A = 26 periods Senkou Span A
Black line = 26 periods Chikou Span. Lagging line