Alibaba, Ebay, Sunrun Stocks Look Prepared To Break Out Of This Key Pattern: What's Next? - Alibaba Gr Holding (NYSE:BABA), eBay (NASDAQ:EBAY), Sunrun (NASDAQ:RUN)

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Alibaba Group Holdings, Ltd (NYSE:BABA), Ebay, Inc (NASDAQ:EBAY) and Sunrun, Inc (NASDAQ:RUN) have all settled into bullish flag patterns on the daily chart. The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines.

For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
Bullish traders will want to watch for a break up from the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.

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A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern or if the flag falls more than 50% down the length of the pole

The Alibaba Chart: Alibaba reversed into an uptrend on Oct. 5 after reacting to a bullish double bottom pattern on the daily chart. The stock inclined over 20% and through two resistance levels before bumping into a higher resistance zone on Oct. 11 near the $170 level and rejecting the area. Since the date, Alibaba has been consolidating under the resistance level in a bull flag pattern.

The Ebay Chart: Ebay hit a bottom of $68.28 and Oct. 4 and reversed course into an uptrend, soaring over 11% higher over the four trading days that followed. After the stock bust through a resistance level at $73.97 it began to consolidate, which set up the flag of the bull flag pattern. If Ebay is able to break up from the flag it has a chance to run back toward its all-time high of $77.83.

The Sunrun Chart: Sunrun broke up from a falling channel on Oct. 7 and soared up 20% higher over the four trading days that followed. After busting through a resitance level at $48.13, Sunrun has been consolidating lower. The rise up paired with the consolidation has settled the stock into a bull flag pattern. The consolidation has also helped to cool Sunrun's relative strength index, which gives the stock room for another push higher if the bull flag is recognized.