What To Watch On The Alibaba, Baidu And Nio Charts After The Chinese Stocks Lose Momentum

Alibaba Group Holdings, Inc (NYSE:BABA), Baidu, Inc (NASDAQ:BIDU) and Nio, Inc (NYSE:NIO) all gapped up higher to start Monday’s trading session after news that China’s banking and insurance regulator recommended lenders provide credit to developers in order to help them finish housing projects that have been delayed.

China has recently begun to relax some of the harsh restrictions placed on a number of its home-based companies in order to boost its economy.

The surge in a number of Chinese stocks was hampered intraday due to volatility in the general markets, which saw the S&P 500 gap up to start the trading day before rejecting at the $3,900 level and closing the trading day down about 0.84%. 

Alibaba and Baidu weren’t helped by the daily candles the stocks printed on Monday, which likely indicates lower prices are on the horizon and a downtrend may occur. Nio has been trading in a downtrend since June 27 and the price action on Monday likely confirms the trend is still intact.

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The Alibaba Chart: Alibaba negated its uptrend on July 11, when the stock printed a lower low below the $111.38 mark. Alibaba’s rise to the $106.96 mark on Monday likely confirmed that the stock is now trading in a downtrend because the stock printed a bearish Marubozu candlestick, which indicates lower prices are likely to come on Tuesday.

The Baidu Chart: Baidu attempted to fill an upper gap that exists between $115.58 and $120.70 on Monday but rejected the bottom of the range and fell lower intraday. Baidu closed the trading session with a long upper wick, which caused the stock to print a shooting start candlestick and likely indicates lower prices will come on Tuesday. If that occurs, Monday’s price action will likely confirm a lower high to indicate a downtrend is the most likely scenario going forward.

The Nio Chart: Nio’s most recent lower low within its downtrend was printed on Friday at $19.93 and the most recent confirmed lower high was formed at the $23.28 mark on July 8. On Monday, Nio printed a doji candlestick, which could indicate lower prices will come on Tuesday. Bearish traders will want to see Nio form another lower low over the coming days to confirm the trend is intact.

See Also: How to Read Candlestick Charts for Beginners