Alibaba, General Motors, JPMorgan Stocks All Resume This Bullish Pattern: How To Trade It

Alibaba Group Holdings, Ltd BABA, General Motors Company GM and JP Morgan Chase & Co JPM are all trading higher in strong uptrends. An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.

The higher highs indicate the bulls are in control while the intermittent higher lows indicate consolidation periods. Traders can use moving averages to help identify an uptrend with rising lower frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend and rising longer-term moving averages (such as the 200-day simple moving average) indicating a long-term uptrend.

A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows often take place at resistance and support levels.

In an uptrend the "trend is your friend" until it’s not and in an uptrend there are ways for both bullish and bearish traders to participate in the stock:

• Bullish traders who are already holding a position in a stock can feel confident the uptrend will continue unless the stock makes a lower low. Traders looking to take a position in a stock trading in an uptrend can enter usually find the safest entry on the higher low.
• Bearish traders can enter the trade on the higher high and exit on the pullback. These traders can also enter when the uptrend breaks and the stock makes a lower low indicating a reversal into a downtrend may be in the cards.
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The Alibaba Chart: Alibaba reversed course into an uptrend on Dec. 3, after hitting a support level at the $108.80 level. The stock has since made a Dec. 7 high at $130 and looks to have printed a higher low at the $121.32 mark on Wednesday. If the uptrend is to continue Alibaba will need to make a higher high above Tuesday’s high-of-day.

The General Motors Chart: General Motors is trading in a confirmed uptrend because it has made a consistent series of higher highs and lower lows after finding a bottom on Nov. 30 at $57.44. The stock’s most recent higher high is found at the $62.38 level and the most recent higher low at $58.70. Bullish traders can watch for General Motors to print a reversal candlestick above the most recent higher low.

The JP Morgan Chart: Like Alibaba and General Motors, JPMorgan has recently reversed into an uptrend. The stock’s most recent higher high was printed on Tuesday at $163.39 and the most recent higher low looks to be printing on Thursday after the stock bounced off the $158.65 level. If the stock closes the trading session near to its opening price it will print a doji candlestick, which could indicate the stock is headed back north.