BABA: Stocks may collapse to 49.33
The BABA formation hints at a bearish corrective trend taking the form of a cycle triple zigzag w-x- y-x-z.
At the moment, the market is in the final part of this pattern. We see a completed actionary wave y, which has the form of a primary double zigzag, and a second small intervening wave x.
Now the final actionary wave z is under construction, which, apparently, takes the form of a primary standard zigzag, as shown in the chart.
The primary wave has the form of an impulse (1)-(2)-(3)-(4)-(5), and the correction is an intermediate double zigzag (W)-(X)-(Y). In the near future, stocks may continue to fall in the primary wave in the form of impulse (1)-(2)-(3)-(4)-(5) to 49.33. At that level, primary impulse wave will be at 161.8% of impulse.
The second chart shows a situation in which the formation of the cycle intervening wave x continues. Here, the intervening wave x will take the form of a double zigzag of the primary degree. The first two zigzag sub-waves look finished.
Now the price is in the wave. It is assumed that this wave will take a standard zigzag structure (A)-(B)-(C), as shown in the chart.
The growth of the shares should be expected to 149.02. At that level, cycle intervening wave x will be at 38.2% of actionary wave y. However, the nearest target for the bulls is a maximum of 126.39, the end of the first intermediate impulse (A) is expected at it.
Author
Jing Ren
Orbex
Jing-Ren has extensive experience in currency and commodities trading. He began his career in metal sales and trading at Societe Generale in London.
