Alibaba HKD88 billion listing may not be so auspicious for BABA

Alibaba (BABA) faces a risk of a corrective decline below 188.28 as its HK secondary listing looms.

Medium-term technical outlook on Alibaba (BABA)

click to enlarge charts

Key Levels (1 to 3 weeks)

Pivot (key resistance): 188.28

Supports: 178.96 (trigger), 161.90 & 155.00

Next resistance: 211.70

Directional Bias (1 to 3 weeks)

BABA is at risk for a corrective decline within a major “Symmetrical Triangle” range configuration in place since 24 Dec 2018 low. 188.28 key medium-term pivotal resistance and a break below 178.96 is likely to reinforce a potential drop to target the next support at 161.90 max 155.00.

However, a clearance with a daily close above 188.28 invalidates the medium-term bearish scenario for a bullish breakout to retest its current all-time high at 211.70.

Key elements

  • Since its all-time of 211.70 printed in Jun 2018, further advances of BABA have been capped by a major descending trendline resistance where its price action has been rejected last week, the 2nd time since Apr 2019.
  • Last week’s price action has formed a weekly “Bearish Harami” candlestick pattern with an impending follow through weekly “Bearish Engulfing” candlestick based on yesterday, 20 Nov closing price (2 more days before the end of this week). These observations suggest a potential bearish reversal in price action after a multi-week up move.
  • The 188.28 key medium-term resistance is defined by a confluence of elements; the major descending trendline from Jun 2018, the gapped down formed on 06 May 2019 and a Fibonacci retracement/expansion cluster.
  • The daily RSI oscillator has reintegrated back below a significant corresponding resistance at the 60 level which indicates the recent upside momentum of price action has started to wane.

Charts are from eSignal 

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.