Alibaba has been sliding for more than a year, and trend followers may see reasons to expect more downside.
The main pattern on this daily chart of the Chinese e-commerce giant is the series of lower highs since July 8. BABA has managed to hold support around $88 this month. The result could be a descending triangle, a potential sign of bearish continuation.
Next, the formation began after prices failed at the 200-day simple moving average (SMA). That could also suggest a longer-term downtrend remains in effect.
Third, notice how the 50-day SMA briefly rose in June and July as the previous trend paused. (This is highlighted by our Moving Average Speed custom script.) Then consider how it turned sharply negative again in recent sessions. Is that another sign of the downtrend resuming?
Finally you have the feeble and temporary bounce after BABA reported earnings on August 4. While the numbers beat estimates, the bigger macro weakness in China seems to be hurting the stock -- especially as the Yuan nears a 23-month low against the U.S. dollar:
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com/important-information.
The main pattern on this daily chart of the Chinese e-commerce giant is the series of lower highs since July 8. BABA has managed to hold support around $88 this month. The result could be a descending triangle, a potential sign of bearish continuation.
Next, the formation began after prices failed at the 200-day simple moving average (SMA). That could also suggest a longer-term downtrend remains in effect.
Third, notice how the 50-day SMA briefly rose in June and July as the previous trend paused. (This is highlighted by our Moving Average Speed custom script.) Then consider how it turned sharply negative again in recent sessions. Is that another sign of the downtrend resuming?
Finally you have the feeble and temporary bounce after BABA reported earnings on August 4. While the numbers beat estimates, the bigger macro weakness in China seems to be hurting the stock -- especially as the Yuan nears a 23-month low against the U.S. dollar:
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com/important-information.
