The Last BYD Update Saved Some Investors From a 50% Loss. But There Might Be a Good Buying Opportunity Very Soon.

BYD is one of the largest automobile companies in China and has been a very profitable investment choice over its lifetime in public markets. It is a popular among major institutions like Berkshire Hathaway which is an over 3% stakeholder. Blackrock and J.P. Morgan and Blackrock together just bought over 8 million shares this December.

The company already has tons of cash in hand snd they rake in billions of dollars every quarter. The share price has gone up over 20,000% since it's IPO into Chinese markets. They have also just recently expanded their operations in Mexico to get a piece of the recently booming Mexican economy. I think it is safe to say that this bullish trend will continue with this ticker symbol. But BYD's stock price has been dropping lately so when is a good time to buy in?

My previous comments on BYD mentioned a possible downside incoming as a topping pattern might be forming in the longer time frames. You can see my previous comments in the link below.

The timing of the BYD update could not have been more perfect as BYD reached its peak that day, and a 51% drop immediately followed.

During this time, the price action of BYD was nearing a long-term upward trending resistance level near all-time highs with a bearish multiple top forming in the charts. From a risk to reward standpoint, this is not the best entry point. Also, the chinese economy and equity markets had already been showing signs of weakness. So, I warned investors to watch out for a potential selloff based on the technical setup. I was happy to see that some investors were saved from a major headache as the stock lost over half of its value.

Currently, BYD's share price is on a downward trajectory, so the picture doesn't look good. But the price action is approaching a few long-term support levels. I will be watching for a potential rebound near these areas.

Investors and traders were ready to pile their cash in at these levels in the past. We might see the same behavior again near these price points.

I should mention that below each of these support levels, there is a large amount of space to the downside that could be filled before the price reaches the next support. Keep this risk in mind if you are a swing trader.

In the very near-term charts, you can see how things are about to flip to bullish as the price action has climbed above the downward sloping price channel.

If the price can move above the near-term resistance, then the trend will be officially bullish in the very short time frame.

To add to the short-term bullishness, it appears that there might be a slight rebound off of the bottom of the price channel that I mapped out in the chart below. Based on the current trend, I would expect the price to at least return to the top of the price channel before any potential pivot in price action.

I could always be wrong. There are a couple zones of resistance that the price will have to contend with before it will reach the top of the price channel. Once it gets there, then it would be wise to reevaluate the situation to determine the probabilities of a breakout or a rejection.

In the shorter time frames things look ready for a dip buy type of swing trade. But with a quick glance at the larger time frame with monthly candles, you could say that there is more room for significant downside before anyrebound can happen.

This could very well be the case since over the past few years chinas economic data has not been the best, there real-estate industry has persistantly remained in troubled waters, and Chinese equity markets have been very weak. So as for the macro picture, things dont look very good. An economy can remain weak for a long time but eventualy we will see improving economic data.

Perhaps 2024 will shine a ray of sunshine into Chinese markets. If we can see recovery in the global economies, including chinas, then that would be the first pivotal signal. Lower interest rates will certainly add some positive sentiment into world economies and equity markets like China's. Especially if China starts easing monetary policies in unisen with the Fed and other world banks. When the Fed eventually does begin cutting rates then I believe the rest of the world will follow. Or at least there will be a general rate cutting environment accross world economies, in my opinion. But nobody knows for sure when this will happen.

Personally as a swing trader I am seeing a potential trade opportunity at these major technical levels. As a long-term investment, I can see these areas as good accumulation points. I can see a possible rebound could be coming soon based on the technicals in the charts. If I see a rebound forming at any of these major support levels that I mentioned, then I will react accordingly. If there is a catalyst like news about the company or a macroeconomic or geopolitical event that transpires near these levels, then that might help me decide which direction the price action might travel.

As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Don't invest money that you can't afford to lose. Give some of your investments time and know when to cut your losses.

Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.