Luckin Coffee Inc. engages in the retail sale of freshly brewed drinks, and pre-made food and beverage items in the People’s Republic of China. It offers freshly brewed drinks, including freshly brewed coffee and non-coffee drinks; and food and beverage items, such as light meals.

The company operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms that cover the customer purchase process. As of March 31, 2019, it operated 2,370 stores, including 2,163 pick-up stores, 109 relax stores, and 98 delivery kitchens in 28 cities in the People’s Republic of China.

LK price chart analysis

When we look at Luckin Coffee (NASDAQ: LK) wearing our supply and demand glasses we can see a very strong supply imbalance created on the monthly timeframe around $32 per share. That’s where we are interesting in selling this Chinese stock. It might took some time for Luckin Coffee to retrace to that strong imbalance, we might see price rallying to $22-35 price area around A where shorts could start being high odds again. Take a look at the monthly timeframe analysis in the screenshot below.

Luckin Coffee dropping strongly
Luckin Coffee dropping strongly

As you probably know if you’ve been reading our stocks analysis in the past, we do not need to pay attention to stock fundamental analysis, Luckin Coffee (NADAQ: LK) is not an exception. However, if you still want to read about the company before investing, you can obviously do it, but always bearing in mind that whatever you read should not prevent you from executing a trade using supply and demand imbalances.

I’ve read a bit about the company…

Luckin Coffee’s COO and his subordinates engaged in fraudulent transactions, inflating revenues and expenses significantly. Could that affect the stock? Probably? We know Luckin Coffee (NADAQ: LK) has a clear short bias, a headline like that should not help the interested buyers, all the opposite.

On top of that, if we add the context of COVID-19, if one chooses to ignore the warnings for social distancing and continue to gather in groups in close proximity, to drink coffee the person could eventually be infected by a spreader.

For those who choose to own the stocks of Chinese companies, there’s the perennial concern whether their financials are authentic and doubts fly whenever there are reports released. To make the matter worse, every now and then, we read some management having to admit to fraudulent practices in their companies. That doesn’t help at all, it does not investors any safety at all.

Luckin Coffe (NASDAQ: LK) price action analysis

This is the kind of price action technical analysis you will learn in our trading community. You will learn how to locate new supply and demand imbalances and trade without using any indicators, no news, no fundamental analysis, no earnings announcements, no volume or VSA analysis. Just supply and demand imbalances.

Trading supply and demand imbalances is ideal for beginners and those with a full or half time job, you won’t need to stay in front of the computer all day long trying to move price action with your mind. 

Luckin Coffe supply and demand imbalances

As supply and demand traders, we do not need to pay attention to Luckin Coffee (NADAQ: LK) news, fundamentals or any earnings reports. Once a big timeframe imbalance has gained control, earnings do just the opposite and react strongly to those imbalances. Why is it that you see positive earnings and then the underlying stock drops like a rock, or a negative earnings announcement and the stock rallies like a rocket out of control? You are probably missing the fact that there are big imbalances gaining control.

Unless you are doing very short term trading and scalping, you should not worry about fundamentals or earnings announcements on Luckin Coffee (NADAQ: LK).

You can use these imbalances to plan your trades in lower timeframes. Trading is just waiting for the right trigger points and scenarios to present themselves, this game has got a name and it’s called the waiting game. We need to patiently wait for the correct scenarios and setups to happen and wait for price to pullback or dip into the price levels we want to trade, in our case these price levels are made of supply and demand imbalances.

If you want to learn how to trade using our supply and demand trading strategy, join our supply and demand stock trading course.

There are several ways of buying stocks and futures. When trading stocks, you can buy shares of the underlying stock or use options strategies to go long or short at these specific supply and demand levels, long calls or long puts or spreads. You can even buy a CFD (contracts for difference) if you are in a country where it’s allowed.


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