JD Stock: Anticipating New All-Time Highs
I am focusing on JD.Com Inc(ADR) (NASDAQ: JD) stock because I am bullish on the prospects of this investment going forward. My bullish beliefs surrounding JD.Com stock are based on technical analysis.
Technical analysis is a method of investment analysis based on the notion that historical data points like price and volume can be used to forecast what the future may bring. I have been studying and applying this method of investment analysis for nearly two decades and feel that I am well-equipped to analyze the prospects of JD stock going forward.
The following stock chart illustrates the indications that have me believing that higher JD stock prices are on the horizon.
Chart courtesy of StockCharts.com
This stock chart illustrates that a bullish trend that began its development in November 2016 has been constructive in nature.
Constructive price action consists of an alternating wave structure containing impulse waves and consolidation waves.
The impulse waves, highlighted in green, are advancing in nature. Impulse waves capture the stage in a bullish trend where the stock price stages a sustained move toward higher stock prices.
The consolidation waves, highlighted in purple, are corrective in nature and capture the stage in a bullish trend where the stock price refrains from advancing and instead corrects. Corrective price action serves to unwind any overbought conditions created during the impulse wave that preceded it. Consolidation waves are a necessary ingredient in a bullish trend because they create the necessary conditions so an advancing impulse wave can develop.
Impulse waves and consolidation waves are building blocks that support and feed off each other in order to create and sustain a trend. The moving average convergence/divergence (MACD) indicator, which is located in the lower panel, has been instrumental in confirming whether an impulse wave or consolidation wave is in development.
MACD is used to determine whether bullish or bearish momentum is influencing the price action in a stock. This indicator uses the crossing of a signal line to distinguish between these two polar opposites. The MACD indicator is a very important and influential indicator because, in order for a stock to make a sustained move toward higher or lower prices, the applicable momentum is required.
The JD stock chart is a great example of momentum at work because when a bullish MACD cross was generated in January 2017, it confirmed that an impulse wave was in development. In August, a bearish MACD cross was generated and it confirmed that a corrective consolidation wave was in development.
Currently, the MACD signal lines are in bullish alignment, supporting the notion that an impulse wave is in development, which means higher JD.com stock prices can be expected.
I expect that the current impulse wave will match the one that preceded it and, therefore, I can easily expect that new all-time highs are on the horizon. From a linear perspective, I can project a possible objective for JD stock of $62.00, which translates in a return of 33.88% from current prices. In the context of the current frothy market environment, I would not be surprised to see the stock price move be parabolic in nature and move beyond that price objective.
The indications on the JD stock chart suggest that the stock price is primed for further gains. This bullish was view was generated using technical analysis, and as long as the indications on the JD.com stock chart support further gains, I will maintain my bullish bias until there are indications that suggest another view is warranted.