Can BABA extend the breakout?

Fig. 1.

$Alibaba (BABA.US)$ was trading in a falling wedge pattern as shown in Fig. 2. The Downtrend line 1 provided dynamic resistance. But the RSI was showing a bullish divergence with higher lows. Then it broke out of the falling wedge. The high volume confirmed the breakout. This shows short-term bullishness.

Fig. 2.

Fig. 3.

Alibaba may rise to resistances around 105.05 and 129.40 (which stretched back to Apr 2022) as shown in Fig. 3.

Fig. 4.

Fig. 4 shows the weekly chart for Alibaba. The 105.05 level is also near the 100-week MA. It may encounter resistance there.

Alibaba appears to be in an inverse head and shoulders pattern with the neckline at 129.40. For the pattern to be validated, it must rise above the neckline. Then it will be bullish in the long term and rise to around the 200-week MA.

If it is unable to break out of the neckline, it may trade in a range between 129.40 and support around 73.28 which it has been in since Nov 2021.

Alibaba has been split into 6 units with each one going for IPO. This will unlock shareholder value. Its subsidiary, Ant.com, has paid a nearly USD 1 b fine. This may signal the end of China's regulatory crackdown. The listing of the 6 units may serve as a catalyst for the stock to be bullish in the long term. Till then, it is likely that it trades in the above range in the medium term.

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LEng LEng : Thanks for sharing your TA @bullrider_21

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bullrider_21 OP LEng LEng : Glad to share @LEng LEng

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