Shares of Alibaba Group Holdings (BABA) are weak again today. The stock has been in free-fall after the Chinese government began cracking down on them and other tech mega-caps a few weeks ago. Alibaba shares have fallen from an all-time high near $320.00 to their current $258.30 range. Based on Alibaba's stock chart analysis, investors should be looking for more downside before venturing into this trade. The stock will likely see downside until it hits $240.00 and could trade as low as $232.00. As a technical trader, I will begin accumulating at $240.00 and keep buying down to the $232.00 level. In that range, investors should expect a significant bounce higher, even possibly seeing $260.00 within weeks.
The Alibaba stock chart analysis is simple to read. The daily 200 moving average is at $239.37. This is where the $240.00 initial accumulation level comes from. Then there is a significant gap fill at$236.75 which will be additional major support. Lastly, the $232.00 level is a significant pivot high from January 2020, just as the COVID-19 pandemic was starting. Three major technical points within a few Dollars give us a major support range. In addition, as Alibaba continues to trade lower, the technical metrics like RSI and MACD will become oversold to the point of adding fuel to a bounce.
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