Shares of Chinese retailer Vipshop Holdings Limited (NYSE:VIPS) collapsed 20% on Tuesday after the company reported earnings and issued weak guidance for the coming quarter. From December 2017 to March 2018, Vipshop Holdings had gained over 100% but had seen lots of distribution selling over the last month or two. Big money knew what was coming it appears.
As a technical trader, I am expecting further selling from retail investors, driving shares of Vipshop Holdings to $8.45. The stock is currently trading just over $12.00/share. Once at $8.45, the technical chart will have filled the gap from December 2017 and become a strong bounce/buy swing trade. Technically speaking, this is the ideal entry point offering the best reward for the lowest risk.