Is Alibaba Stock Headed Toward $150? Here's A Look At The Chart

Alibaba Group Holdings, Ltd. - ADR BABA is trading about 1% lower on Tuesday in consolidation after surging 35% between Dec. 30 and Friday.

On Monday, it was reported activist investor Ryan Cohen had acquired a stake in the Chinese e-commerce and tech giant during the second half of 2022. Cohen intends to have a long-term collaborative relationship with Alibaba, according to the report. He believes Alibaba can achieve double-digit sales within the next five years.

Alibaba had been trying to increase its AliExpress sales and on Monday, it was announced the company had partnered with Splitit Payments to power the "Pay After Delivery" option for shoppers.

Despite sluggish sales, Alibaba had been trading in a fairly consistent uptrend since Oct. 24, making a series of higher highs and higher lows after reversing course off the $58.01 mark. Tuesday’s consolidation looks to have temporarily halted the upwards trajectory but is needed because the stock’s relative strength index is overheating.

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The Alibaba Chart: Alibaba is consolidating with an inside bar on Tuesday, with all the price action taking place within Friday’s trading range. The pattern leans bullish for upwards continuation because the stock was trading higher before forming the inside bar.

• If Alibaba breaks down from the inside bar later on Tuesday or on Wednesday, the stock may settle into a bull flag pattern on the daily chart. Traders and investors can then watch for Alibaba to eventually break up from the flag on higher-than-average volume to indicate the pattern was recognized.
• If Alibaba forms a bull flag and eventually breaks up from the pattern, the measured move is about 33%, which indicates the stock could eventually surge up toward about $150. If Alibaba falls under the eight-day exponential moving average, the bull flag will be negated.
• Alibaba is currently trading in a gap that was formed on July 11, 2022, and is about 90% likely to completely fill the gap in the future. If Alibaba breaks up from the inside bar pattern or forms a bull flag under the gap before breaking upwards, the stock may find resistance at the top of the empty trading range.
• Alibaba has resistance above at $121.95 and $130 and support below at $110.06 and $104.44.

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Photo: Courtesy AlibabaGroup.com