BABA medium term analysis
There's so much pain for BABA holders right now, been down -58% from highs.
The downward channel is quite steep, but it's appraoching historical levels of support. Daily RSI is at 26 and it can go lower to the 20 area, especially for the weekly RSI there's more space to the down side (32 right now), going probably to below 25, correspond to the levels of support 120 and 110.
Starting from the 120 to 110 level, I'd start buying lightly, expecting a reversal to the median regression line. The rebound would be betwen 15 and 20%.
Depending on the conditions then, I want to see the price break obove the 21 moving daily average, if so we'll test the upper channel trendline, and we'll break it or not, depending on the news from china.
I'd expect rather another leg down to the 95 to 85 area, taking us to Q1 earnings, if they are good, we can expect some buyers and we are likely to start a major multiyear upward movement.
However, if earnings disappoint, and news from China about regulations are still bearish, we can expect a move to the support area of 70-60 which would be more than 80% correction, in my opinion it's highly unlikely and we'll probabely rebound in worse case at 85.
for a reversal we want to see the pricing breaking above it's moving averages and breaking the regression channel. Consolidating and builing upward momentum, then the nightmare is over and a new page is open for BABA.
Trade safe!
The downward channel is quite steep, but it's appraoching historical levels of support. Daily RSI is at 26 and it can go lower to the 20 area, especially for the weekly RSI there's more space to the down side (32 right now), going probably to below 25, correspond to the levels of support 120 and 110.
Starting from the 120 to 110 level, I'd start buying lightly, expecting a reversal to the median regression line. The rebound would be betwen 15 and 20%.
Depending on the conditions then, I want to see the price break obove the 21 moving daily average, if so we'll test the upper channel trendline, and we'll break it or not, depending on the news from china.
I'd expect rather another leg down to the 95 to 85 area, taking us to Q1 earnings, if they are good, we can expect some buyers and we are likely to start a major multiyear upward movement.
However, if earnings disappoint, and news from China about regulations are still bearish, we can expect a move to the support area of 70-60 which would be more than 80% correction, in my opinion it's highly unlikely and we'll probabely rebound in worse case at 85.
for a reversal we want to see the pricing breaking above it's moving averages and breaking the regression channel. Consolidating and builing upward momentum, then the nightmare is over and a new page is open for BABA.
Trade safe!
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