Can Alibaba Stock Climb Out Of This Bearish Channel?

Alibaba Group Ltd. BABA shares are trading lower Thursday after the company reported third-quarter earnings.

Alibaba reported quarterly earnings of $2.65 per share, beating the analyst consensus estimate of $2.55. The company also reported quarterly sales of $38.07 billion, missing the analyst consensus estimate of $38.83 billion.

Alibaba was down 4.09% at $105.21 Thursday afternoon. 

See Related: What's Going On With Alibaba Shares Today?

Alibaba Daily Chart Analysis

• The stock continues to trade lower in the descending channel and now sits in the middle of the channel. This channel has been holding as support and resistance since November 2020. This channel may continue to hold unless the stock can break above the channel’s resistance and begin to form higher lows in time.
• The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue). This indicates bearish sentiment, and each of these moving averages may hold as an area of resistance in the future.
• The Relative Strength Index (RSI) has fallen lower throughout the past few days indicating that more sellers have been moving into the market. The RSI now sits at 33, near the oversold region. The price may continue to fall lower if the stock can reach and hold in the oversold region.

What’s Next For Alibaba?

Alibaba still sits in a bearish trend and doesn’t look as though it will be able to break it soon. The stock will need to see some strong bullish momentum and be able to break above the resistance line that has pushed it lower every other time before.

Bullish traders are looking for this resistance break and then want to see the stock form higher lows. Bulls are also looking for the RSI to cross back above the middle line and be able to hold above it for a time. Bearish traders are in control of the stock and want to see it continue to trade in the channel. As long as the price stays within the channel, bears will be in full control of the stock.