Alibaba HKD88 billion listing may not be so auspicious for BABA
Kelvin Wong November 21, 2019 9:28 AM
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.
- 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
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.