Alibaba Stock Is Trading In A Pattern: What Traders Should Know

Alibaba Group Holdings LTD. BABA shares are trading lower Tuesday after a Wall Street Journal report detailed how Alibaba was hit with a large data leak throughout an eight-month period. The article said that over 1.1 billion pieces of user data including numbers such as IDs and phone numbers were taken.

Alibaba shares dropped 1.82% in Tuesday's session, closing at $210.06. 

See Also: Why Alibaba Shares Are Moving Today

Alibaba Daily Chart Analysis

• Shares broke out of the descending triangle pattern and retested the area that once held as support, but is now resistance.
• The stock is trading below both the 50-day moving average (green), and the 200-day moving average (blue), indicating sentiment in the stock is bearish.
• Each of these moving averages may hold as an area of resistance in the future.

Key Alibaba Levels To Watch

• Alibaba dropped below support and went to retest the area as resistance. It was unable to break above resistance and fell lower.
• In theory, when a stock breaks below support in a descending triangle and tests it again as resistance, the stock typically will see a large dropoff.
• To see Alibaba recover, the price of the stock needs to cross back above the $220 level. If the stock continues to trade under this level, it could see a strong downward push.

What’s Next For Alibaba?

Bullish technical traders would like to see the stock cross back above the $220 level. If the stock can cross back above this level and start to form higher lows, the bulls will start taking control of the stock once again.

Bearish technical traders would like to see the stock continue to hold the $220 level as resistance and fail to break above the level. This makes the stock more prone to see a push downwards and continue to fall.