We do not have a long history of price action to consider with Baozun Inc. (BZUN) , but it is interesting and worth examining. Prices of the e-commerce company have made considerable gains from its two bases -- a first base from around $6 from the middle of 2015 to the middle of 2016, and a second-level base around the $16 level from September/October 2016 to this May.
Prices are up nearly six-fold from the first base and have doubled from the second base. Is there an encore in the charts? Let's check.
In this updated daily bar chart of BZUN, above, we can see "back and forth" trading from September, or what technical analysts typical call a consolidation pattern. During this sideways or neutral-looking price action, prices trade above and below the 50-day moving average line. The whole time of the past 12 months the 200-day moving average line has a positive slope. The slope of the 50-day average turns positive in late February, but there is still time to acquire a long position before paying up for it.
The daily On-Balance-Volume (OBV) line has a slightly positive slope the past year with a stronger move up from June. A rising OBV line is a sign of more aggressive buying. The trend-following Moving Average Convergence Divergence (MACD) oscillator moved above the zero line (bullish) in February, the same time the 50-day average turns positive. Recently, the MACD oscillator crossed to the downside, generating a take-profits sell signal.
In this limited weekly chart of BZUN, above, we can see that prices are above the rising 40-week moving average line. The weekly OBV line is positive and the MACD oscillator on this time frame is in a strong and bullish setup.
In this Point and Figure chart we can see the second base pattern followed by another consolidation pattern. This chart suggests a correction is possible, with prices having the potential to decline to the mid-$20s.
Bottom line: Volume has expanded with the uptrend, which is bullish, and while some may consider BZUN extended in the short run this might only translate into a sideways market because of the bullish weekly indicators. I would look for a sideways market around $32 before BZUN tries the upside again.
