With China starting to reopen some of its major cities from lockdown, Chinese stocks have been bouncing back. Over the last few weeks, online agriculture and food market website Pinduoduo (PDD) has rocketed from the bottom of the red zone to the top of the Green Favored Zone in the SIA NASDAQ 100 Index Report. Yesterday it finished in 1st place, up 3 spots on the day and up 37 positions in the last month.
A major breakout is underway in Pinduoduo (PDD) shares. Back in March, a downtrend that started in early 2021 finally bottomed out in a selling climax where the shares plunged then rebounded on high volume. A bullish Island Bottom, where the shares gapped down, stayed low only for a couple of days, then gapped back up also indicated that the last of the weak hands had finally been flushed out.
For the last two months, the shares have been base-building in the $30-$50 range and yesterday they broke out on volume and closed above $50, signaling the start of a new upleg within an emerging recovery trend. Initial upside resistance appears at a long-term downtrend line near $55, then the $60-$62 area based on previous peaks, then $70 based on a measured move. Initial support has moved up toward $45 from $40.
Pinduoduo (PDD) bottomed out in March, but its recovery potential has become clearer since it established a higher low near $34.00 in May. In recent days, the shares have launched upward into a bullish High Pole, completing a Bullish Double Top, and a bullish Spread Double Top along the way. Yesterday, PDD broke out over $50.00 and completed a bullish Spread Triple Top pattern, confirming the start of a new recovery play.
From here, upside resistance tests appear at previous column highs/lows near $55.20, $59.75, and $64.65. Initial support appears near $46.20.
With its bullish SMAX score increasing to 9, PDD is exhibiting strength against the asset classes.
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