To The Moon

$Li Auto(LI)$  I am revising my trade stance to LEAN BULLISH on LI from the previous stance of neutral. 

As I mentioned in my previous post, the stock has been trading in an ascending broadening wedge formation.

This time round, I have plotted the Fibonacci retracement levels for the stocks by taking a recent swing high of 41.49 and a recent swing low of 12.52. The near-term levels are as shown in the chart above.

During the last trading session, the stock closed above the 19.38 retracement level as well as the microterm 5DMA and 10DMA. It also managed to hold the broadening wedge pattern, which leads me to think that the stock would swing up to the 200DMA across the next few trading sessions. 

Currently, the stock has a healthy 14-day RSI reading of 52.70 and is sitting between the lower and middle Bollinger Bands. Over the weekend, the company released strong delivery numbers for their EVs, and the HK-listed LI shares are currently trading at 84.65HKD. Given a 2:1 ADR ratio and a conversion rate of 1HKD: 0.1280USD, the stock should gap up above the middle BB and open above 21 in pre-market. 

I am now expecting a potential backtest of the middle BB before a move towards the 100DMA during trading hours, and a pullback before a measured move higher. 

So, how do we swing this? If you're a swing trader, I would get CALLS (22C or 22.5C) expiring 2-3 weeks from now. This is likely to be a good risk to reward swing trade from here. If you're day trading this stock or the options on this stock, then pay attention to the levels and moving averages on my chart for entries and exits. Good luck everyone! 

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