The Alibaba Group Holding Ltd (NYSE: BABA) has been under a lot of pressure lately, after its founder Jack Ma spoke negatively about the current regulatory system in China, back in the end of October. Since then, the stock declined somewhat, but from the beginning of January, it started picking up the upside pace again. The company is set to release its earnings results today, before the US opening bell. The current expectation of the EPS for the Q4 2020 is above the previous $2.28, at $2.78. If that’s the case, this might help lift the share price a bit higher. However, investors will remain wary of the ongoing company’s issue with the Chinese government, which recently suspended the IPO of Ma’s digital payment platform Ant Group.
The technical picture of BABA shows that, yesterday, the stock had broken its medium-term tentative downside resistance line drawn from the high of October 27th. At the same time, the share price is balancing above a short-term tentative upside support line taken from the low of December 24th. For now, we will take a somewhat positive approach, especially if the stock climbs above January’s high, at 269.
If, eventually, the share price does rise above that 269 hurdle, this will confirm a forthcoming higher high, potentially inviting more buyers into the game. BABA may then rise to the 280 zone, marked near the low of November 5th and the high of November 24th respectively, where the stock might get halted temporarily. It could even retrace back down a bit. That said, if it remains somewhere above the 269 area, new buyers may jump in. BABA might then travel back to the 280 obstacle, a break of which could clear the way to the 291 level, marked by the low of November 9th.
The RSI and the MACD seem to be in support of the above-discussed scenario, as both indicators are pointing higher. In addition to that, the RSI remains above 50 and the MACD is above both, zero and its trigger line. The two oscillators show rising upside price momentum.
Alternatively, if the share price breaks the aforementioned upside line and then falls below the 241 hurdle, marked near the high of January 5th and the low of January 14th, that could spook new buyers from entering for a while. The stock may end up sliding to the 225 hurdle, or to the 220 zone, marked by the lows of January 12th and 7th respectively. If there are still no new buyers in sight, the next possible support level could be at 211, which is the lowest point of January.
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