BABA, TWTR update August 15

BABA: Huge run on Friday August 12 due to stellar earnings. The weekly chart (below) tells the story. A huge (black lines) bull flag pattern formed over the past months with a target of $100. At $99.54 we can see the upside target has been reached. However, there are two other things we need to look at: The blue arrow shows that the breakout of the red-green sideways zone ($60-$85) targets $110 ($85+$25). In addition, the 80/20 rule targets $120 as price has now traded THROUGH 80 (into the 90s). Please note the red S/R zone between $100-$110 and the ATH at $120. All fit well with these targets. Since all TIs keep pointing up, we should expect further upside.

baba

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TWTR: Another runner we like. (Bad) earnings caused a serious shake out and one should have sold rightfully so. Then one should have longed the break out once again. Trading is not about hitting peaks and bottoms, it’s about being on the right side of the trade. Clearly it is long now. Price is right at the upper S/R zone between $20-$21, and it needs to break/close above it to target the mid-twenties. The chart below with the black arrows show the Fib-extension price targets of black 1/a:

twtr

 

  •  1.00x targets $20.77 (around today’s high). But with the TIs still pointing firmly up, no negative divergences anywhere and the bollinger bands firmly expanding it is very reasonable to believe this target will be exceeded.
  • 1.382x targets $22.50 (next S/R level). Very doable as the 80/20 rule suggests that a trade through $18 targets $22
  • 1.618x targets $24.50. Not shown on this chart but around $25 is strong long term S/R.
  • 2.000x targets $25.97. Same as above.

Hence, the charts suggest we should see higher prices going forward, not lower. Low to mid-2os appear a good first target. Note that TWTR may have bottomed very long term, but we don’t know that yet. We’ll not worry about unhedged eggs yet, only by what we can reasonable well predict.