Current Technical Picture for Alibaba
It has been a while since my last analytical BABA post. But things are looking up for Chinese equities lately so now is a better time than ever for an Technical Alibaba update.
The long-term picture is starting to look much brighter for $Alibaba (BABA.US)$ and $BABA-W (09988.HK)$. BABA's price has climbed above a downward trending resistance that has kept pushing its price down for about two years. You can see this illustrated in the chart below. This is a bullish development. If this is a false breakout to the upside then the selling would need to start very soon or this bullishness will be confirmed. If you bought any time last year, and held through the downtrend that lasted all of last year, then i commend you on your willpower because BABA has essentially erased all loses from last year.
It is very interesting to see that the bounce in price action that led to a massive rally occurred just near the all time lows on the US ADR's charts. If you are a technical trader who places purchase orders near strong, long-term support levels then this past dip was one of the best buying opportunities for this ticker in several years.
The short-term trend is a strong rally that has lasted for a couple months. This all stemmed from the news of China officially reopening and easing most covid related travel restrictions. This is very bullish news for the second largest economy in the world. I think this rally is definitely not over and there will be many more legs to the upside. I am thinking about buying all of the dips at this point until the macro or technical outlook changes.
If you are a short-term swing trader like me then you can see in the picture below how I will be playing this in the short-term. I should reiterate that if the price does dip below support then I will be waiting patiently for a solid support zone to step in for a good dip buy opportunity. Like I said already, I am bullish and I think there are more legs to this upside rally.
This rally is obviously overheated and the indicators are in overbought territory. In a strong rally the indicators can stay there for several days or even weeks. So don't get too anxious or panic into selling when you see the indicators in oversold territory during this current rally.
Some people don't believe that Chinese equities are in a true bull market just yet. This may be true, but after a 60% rally off of the bottom one could confidently suggest that Chinese equities are at least out of the bear market right? I should also mention that after a 60% rally the short-term swing traders are sitting on a lot of profit. So the correction should be a big one as well. So be prepared to cover your long positions or take a little bit of profit off of the table when the time comes.
Whether BABA goes up or down I have highlighted all of the major technical levels to watch. I believe in this uptrend so my plan would be to buy at the support levels during any correction. Also I will watch for sellers to step in at the resistance levels just in case I need to temporarily cover any long positions. In either case I will be paying very close attention to order flows, price action, and volume to decide if there is a legitimate reversal occuring at these technical levels.
I have also highlighted an area where BABA's price action experienced a lot of choppiness in the past with whipsaw price action and many doji stars confined within the $110 and $129.50 price points. I would expect a little choppiness currently within this zone where the current price of BABA is positioned. So it could possibly be a bumpy ride in the near future.
So do you think this Chinese rally is not going to last long? Or do you believe this is the beginning of the Chinese bull market?
As always, good luck trading. Be careful and be patient. Give your investments time. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. And just follow the trends. A trend is your friend.
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SpyderCall OP : @102640653check it out.
102640653 SpyderCall OP : Ok thanks
SpyderCall OP : im working on tencent right now. it will be a very similar analysis as $Alibaba (BABA.US)$. literally the only difference will be the technical support and resistance levels
Sgtrader88 : The Oct 22 low for BABA is anomaly due to unfounded fear.. Now the price is slowly beginning to reflect its true value, i. e. there is more upside in 2023...
SpyderCall OP Sgtrader88 : i agree. more upside
风生水起 : The curve is too optimistic
SpyderCall OP 风生水起 : everybody thinks china is in a bull market
风生水起 SpyderCall OP : There's no denying it, but choosing individual stocks in China's bull market is very important; there's no Feng Shui