When Will BABA Bounce?

Why has BABA's price remained stagnant for the majority of this year? After the Chinese stimulus rally near the beginning of this year. Alibaba's share price has had trouble climbing out of the long-term bear market it has been in for quite a while.

Currently, the chinese economy is not exactly the strongest economy, but it has been showing signs of slight expansion based on some of the more recent data.

Investors are mostly worried about the chinese real estate market. Turmoil in this sector can bring down real estate asset prices as well as other asset prices, like equities.

If the economic data begins to show contraction, the real estate fears could just add fuel to the fire sale. This would almost certainly affect BABA's stock price.

Fundamentally, this company looks like they are in sound shape. Their balance sheet looks great. This company does not hold a lot of debt. Everything from cloud service revenue, profit from equity investments, and the number of active customers is on an upward trend.

Alibaba's last earnings call was a beat as revenue, and EPS came in above expectations. Estimates are calling for even more upside in earnings into the future. If the economic data shows contraction, or the real estate market blows up, then these future estimates might become invalid.

Baba is trying to get out of this bear market. After the chinese stimulus thrusted BABA's price above the bear market resistance, which was a bullish development, it seems like the price has been consolidating around the downward resistance line for most of this year. We need to see a little more lift-off before we can say BABA is no longer in a bear market.

Take note of the potential reverse head and shoulders pattern that could possibly develop. If this formation is confirmed, then it would be a very bullish look for the long-term picture.

In the chart below, you can see the mid-term trend. It resembles a bull flag following the rally off of 52-week lows. Bull flag or not, the price action is on a downward path. The short-term trend was pointing upward until recently as BABA's price has dipped below trending supprt of this short-term price channel. The near-term trend is highlighted in red. It shows you the current vector of price action on the shortest time frame.

Technically speaking, the mid, short, and near-term trends are looking bearish at the moment. So the next question is, when will BABA bounce? To get a good guess, we will look towards the major support and resistance levels where we might see some buyers step in to rebound the price.

I do want to mention that the current dip in price action below the support level of the short-term trend could possibly be a false breakdown. So far, that does not look like the case. But if the price rockets back above support of the short-term trend and remains above it, then things will look much more bullish than they do now.

The biggest area I am watching for a potential rebound would be the support level of the price channel seen below. The $80.00 price point is the strong area of support to watch. If the price drops below this level, then It would seem that the bear market will continue for some time.

The $103.00 price point would be the breakout price point. I think there will be strong resistance there. A break above this level would confirm higher highs, which is indicative of an uptrend. But for now, these are the strongest support/resistance levels to watch, in my opinion.

I have also highlighted other major support and resistance levels to watch for potential reversals or friction in the flow of price action. Price movements at these levels could provide good day trading opportunities.

As always, this is not investment advice. Good luck trading. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Give your investments time. Don't be greedy. 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. Do your own due diligence. And just follow the trends. A trend is your friend.