Jumia Technologies SA JMIA soared more than 27% on Monday after the Africa-based e-commerce company announced it would expand its logistics services on the continent through a new partnership with United Parcel Service, Inc. UPS.
The announcement added a high level of momentum to the uptrend that Jumia reversed into on March 15, after falling 90%, sending the stock tumbling from its all-time high of $69.89 on February 10, 2021 to a low of $6.41.
In the uptrend, higher highs indicate bulls are under control, while intermittent higher lows indicate periods of consolidation. Traders can use moving averages to help identify an uptrend, with rising moving averages on lower time frames (such as 8-day or 21-day exponential moving averages) indicating that the security is in a steep short-term uptrend. term and increasing long-term moving averages. (like the 200 day simple moving average) indicating a long term uptrend.
A stock often signals when the high has been reached by printing a reversal candlestick such as a doji, a bearish candlestick or a hanging candlestick. Similarly, the highest low could be signaled when a doji, morning star, or hammer candlestick is printed. Additionally, the highest highs and lows often take place at the resistance and support levels.
In an uptrend, the “trend is your friend” until it’s not, and in an uptrend, there are ways for bulls and bears traders to participate in the price:
- Bullish traders who already hold a position in a stock can be confident that the uptrend will continue unless the stock bottoms out. Traders looking to take a position on a stock in an uptrend can usually find the safest entry on the low.
- Bearish traders can enter the trade on the high and exit on the pullback. These traders can also enter when the uptrend breaks and the stock hits a low, indicating that a reversal into a downtrend could be in the cards.
See also: Jumia reports 26% revenue growth in the fourth quarter
The Jumia chart: On March 14-15, Jumia printed a bullish double-dip pattern near the $6.40 level, which caused a reversal into an uptrend. The stock’s most recent lower high was printed on Friday and the $9.30 level and higher high, above the March 30 most recent high of $10.35, was printed on Monday .
- If Jumia closes the trading day near its high for the day, the stock will print a bullish candlestick, which could indicate that higher prices will return on Tuesday. If higher prices do not occur, the second most likely scenario is that Jumia will print an inside bar pattern to start consolidating Monday’s upward move, which would tip higher.
- Eventually, Jumia will trade lower to print another higher low, which could give bullish traders who are not already in position a solid entry.
- If the stock continues to trade higher over the next few days, bearish traders looking to get in a short position and bullish traders looking to take profits can wait for a peak in volume to occur as the bullish traders are running out. The stock is likely to find strong resistance at the 200-day simple moving average, which is currently trading just below the $16 level.
- There is a gap below on the Jumia chart between $9.94 and $10.38, which is likely to close to around 90% in the future. The gap is above the more recent low, and if Jumia trades to fill the zone over the next few days, the uptrend will remain intact as long as it bounces off the zone.
- Jumia has resistance above $12.96 and $14.83 and support below at $9.56 and $6.41.
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