Bitauto Holdings Ltd (NYSE: BITA)

Bitauto Holdings Limited, through its subsidiaries, provides Internet content and marketing services, and transaction services for the automobile industry in the People’s Republic of China. It operates in three segments: Advertising and Subscription Business, Transaction Services Business, and Digital Marketing Solutions Business.

Take a look at the 1-year chart of Bitauto (NYSE: BITA) below with my added notations:

1-year chart of Bitauto (NYSE: BITA)

During the past 2 months, BITA has repeatedly hit the $12 mark (red) as resistance. The stock just tested that level again on Monday and turned lower once again. A solid close above that $12 level should lead to much higher prices for BITA.

The Tale of the Tape: BITA has a key level of resistance at $12. A long trade could be entered on a hold above that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $12.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT