Alibaba Group (9988.HK): Potential Downturn Signals
George Lam May 22, 2020 12:44 PM
Alibaba Group (9988.HK) has shown potential downturn signals, as bad things happened at the same time...
On Wednesday, the U.S. Senate passed a legislation that require companies to certify that they are not under the control of a foreign government and would be banned from the U.S. exchanges if they fail to do so. Yesterday, House Speaker Nancy Pelosi said the House will review the bill. Alibaba Group (9988.HK), a Chinese tech giant dual-listed on NYSE and HKEX, would be vulnerable to such legislation.
To make things worse, the Hong Kong Hang Seng Index is down by more than 3% during early Asian trading hours today, amid hostile political environment in the city. Chinese Premier Li Keqiang said China "will establish sound legal systems and enforcement mechanisms for safeguarding national security in the two special administrative regions (Hong Kong and Macau)", a move that has been seen as curtailing protests and democratic movements in Hong Kong. Earlier, U.S. President Donald Trump warned that he "will address that issue very strongly".
From a technical point of view, Alibaba Group (9988.HK) has shown potential downturn signals on the daily chart. It has possibly formed a double-top pattern, while a bearish evening star candlestick was seen on Wednesday. In addition, it has quickly returned to levels below a declining trend line, probably suggesting a false breakout. The level at $212.0 might be considered as the nearest resistance, with prices likely to test the 1st and 2nd support at $187.0 and $178.0 respectively. Alternatively, a break above $212.0 would open a path to the next resistance at $219.0.
Source: TradingView, Gain Capital
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.