The Alibaba stock (NYSE: BABA) traded quietly the last few days, staying slightly above the 152.50 support zone, marked by the low of August 23rd. Overall though, it stays below the downside resistance line drawn from the peak of October 27th, 2020, and thus, we would consider the bigger picture to be negative.
The stock may rebound somewhat, but even if so, it could meet strong resistance near the aforementioned downside resistance line. This could result in another round of selling, and another test near the low of October 4th, at 137.95. If there is no interest in the stock, even at that price, then a dip lower could challenge the 129.45 zone, which provide support back on October 30th, December 24th, 2018, and January 3rd, 2019. Another break, below 129.45, could carry more bearish implications and perhaps see scope for declines towards the low of May 18th, 2017, at114.25.
Looking at our daily oscillators, we see that the RSI, although slightly below 50, has turned up again, while the MACD stays below both its zero and trigger lines. Both indicators detect negative momentum, but the fact that the RSI has turned up adds to the idea of a small bounce in the short run before the next negative leg.
Now, in order to start examining a potential positive reversal, we would like to see a break above the 183.00 zone, marked by the high of October 19th. This will not only confirm a forthcoming higher high, but also the break above the downside line taken from the peak of October 27th, 2020. The next stop may be the high of August 4th, at 203.75, the break of which could allow advances towards the 230.55 zone, which provided resistance between June 25th and July 1st.
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