Technical Pulse: Li Auto Inc January 13, 2021 237

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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

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Profile photo of Chua Wei Ren

Chua Wei Ren
Technical Analyst
Phillip Securities Research Pte Ltd

Wei Ren specialises in Technical Analysis and has 9 years of experience in studying classic technical price action. He also study and research extensively on Elliott wave theory, Dow Theory and Supply & Demand strategies as he believes that history plays an important role in how the market is reflected in the future.

He graduated with a Bachelor of Economics and Finance from University of Murdoch.

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