Alibaba Group Holding Limited (NYSE:BABA) Target $125
Alibaba Group Holding Ltd.’s (BABA) stock has plunged by 37% from its 2018 highs, and now options traders are betting the stock falls even further by as much as 7% in the coming weeks, from its current price of around $133.25. The shares of the China-based e-commerce company are due to report fiscal second-quarter results on Friday, November 2, before the start of trading.
The technical chart also supports this bearish outlook as the stock approaches a critical level of technical support. The bearish views on the stock come ahead of what is forecast to be a very weak fiscal second quarter for the company.
The chart suggests the stock is nearing a breakdown which could send it sharply lower. The stock is sitting around technical support of $135.50. Should it fall below support, it may drop to roughly $126.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 163.44.
The projected upper bound is: 144.76.
The projected lower bound is: 120.43.
The projected closing price is: 132.59.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 18 white candles and 32 black candles for a net of 14 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 29.9832. This is not an overbought or oversold reading. The last signal was a buy 11 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 34.40. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 11 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -185.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 11 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed down -9.490 at 133.380. Volume was 71% above average (neutral) and Bollinger Bands were 16% wider than normal.
Open High Low Close Volume___
142.820 144.000 131.360 133.380 7,642,638
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 143.86 159.28 181.23
Volatility: 69 51 43
Volume: 4,507,146 4,964,869 4,247,811
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
ALIBABA GRP ADR is currently 26.4% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 19 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.
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