Stock of the day: Alibaba

Alibaba’s recent price action is showing signs of bullish weakness following a failed breakout attempt from an ascending triangle pattern marked with blue lines on the chart. The stock initially broke above the upper boundary of the triangle on Monday, but failed to hold above it, leading to a false breakout (highlighted in yellow).

False breakouts are typically strong reversal signals in the opposite direction, and Alibaba’s recent movement seems to confirm that. On Tuesday, the price dropped back below the breakout level, and Wednesday’s session saw the stock remain below it, reinforcing the bearish sentiment.

As long as Alibaba trades below the $145 level, sentiment remains negative. The next potential target for sellers is the lower boundary of the triangle, marked by the lower blue line. The probability of reaching this level is high, given the lack of buying momentum following the breakout failure.

In the event of a break below the lower blue line, this short-term sell signal could evolve into a mid-term bearish trend, extending the downside potential further.

However, a daily close back above $145 would invalidate the bearish scenario, signaling renewed bullish strength and a potential move higher.

Source: https://www.axiory.com/analytics/stock-of-the-day/stock-of-the-day-alibaba-13