Alibaba's Stock Fall Continues: What's Next?

Alibaba Group Ltd. (NYSE:BABA) shares traded lower Tuesday as several retail companies are taking a hit amid concerns from the COVID-19 Omicron variant, which is causing uncertainty around the holiday season.

Alibaba closed down 3.4% at $127.53.

Alibaba Daily Chart Analysis

• The stock has been falling in what technical traders call a downward trending channel. The stock price has been cut to almost one-third the price it was at in October 2020.
• Connecting the highs shows the downtrend the stock has been in, and taking a line parallel and connecting it to the lows shows where the stock has found support.
• The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue), indicating the stock’s sentiment has been bearish.
• Each of these moving averages may hold as an area of resistance in the future.
• The Relative Strength Index (RSI) continues to fall as it has for the past few months and sits at 26 on the indicator. This is in the oversold area and shows the stock has seen many more buyers than it has sellers throughout the past few months.

See Also: Goldman Sachs Removes Alibaba From Conviction List; Still Keeps 'Buy' With 61% Upside

What’s Next For Alibaba?

Bullish traders want to see the stock bounce and push higher, breaking above the channel resistance. A break of channel resistance may show that the stock is turning around and possibly starting an upward trend.

Bearish traders want to see the stock continue to trade within the channel. Bears are in full control of the stock and as long as the stock stays within the pattern and trades below the moving averages bulls will continue to hold control of the stock.