The Alibaba stock (NYSE: BABA) has been in a recovery mode since July 27th, when it hit support at 179.30. However, overall, the share price continues to print lower lows and lower highs below the downside resistance line drawn from the high of October 27th, which keeps the medium-term outlook negative.
Even if the recovery continues for a while more, we will see decent chances for another round of selling to be initiated near the downside line. If so, we could see another test near 179.30 soon, the break of which would confirm a forthcoming lower low and may see scope for extensions towards the 162.00 area, marked by the lows of October 2nd and 8th, 2019, or the psychological number of 150.00, which is slightly below the low of August 5th, 2019.
Taking a look at our daily oscillators, we see that the RSI rebounded from near its 30 line and now lies slightly below its 50 level, while the MACD, although negative, has bottomed and just crossed above its trigger line. Both indicators suggest that the stock is running out of downside speed and that’s why we are careful that the recovery may continue for a while more.
In order to start examining the bullish case though, we would like to see the rebound extending above the 231.00 zone, which is marked as a resistance by the high of June 28th. This may also confirm the break above the aforementioned downside line and could initially target the 246.00 area, marked by the high of April 13th. If investors are not willing to stop there, the we could see advances towards the high of February 19th, at around 269.00.
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