Photo: The Conmunity – Pop Culture Geek, via Wikimedia Commons

Shares of Alibaba Group Holding Ltd BABA are extremely oversold. That means there’s a good chance they're about to stage some type of rebound.

Oversold means the shares are trading at an extreme below what would be their usual or typical trading range. This attracts buyers into the market because they will be expecting a reversion or rally back up to the average. They could push the price higher.

The bottom part of the below chart is the Relative Strength Indicator. It measures momentum. It shows that in the past nine months, shares of Alibaba were only as oversold as they are now on three occasions. Each time a rally followed and it could happen again.

The stock closed the session down 6.8% at $160.55 per share.

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