Technical Update - Alibaba better than feared earnings doesn't seem to be enough to reverse bear trend
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Alibaba posted better than feared Earnings this morning. The share price dropped 2.2% in Hong Kong trading and is down 2.5% Pre-Market in US trading around $95.
Technically the share has been declining the entire 2021 in a falling channel. Broke sideways out of the upper trendline having met strong resistance at around 124. The lows are higher but the stock failed to make new higher highs.
There is divergence on RSI which indicates selling pressure has been weakening, and a Bullish Engulfing on the weekly in March signaled a bottom and reversal. But Alibaba has not yet been able to really take off.
Alibaba is range bound in a wide range and with slightly higher lows. With the expected opening price around $95 the lows from 2nd August at 88 could soon come under pressure. If Alibaba closes below 88 it is likely to March lows at 73.28. That scenario is not unlikely to unfold with Alibaba trading below both 200, 100 and 55 Simple Moving Averages i.e. underlying bearish sentiment.
For Alibaba to reverse this bearish picture a daily close above 124 is needed. If that scenario plays out there is no strong resistance before around 175.
First indication of that scenario to play out would be if Alibaba can move above 107.
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