The Alibaba stock (NYSE: BABA) traded in a consolidative manner on Friday, after hitting a new record at 302.60. Overall, the stock continues to trade above the upside support line drawn from the low of March 3rd and thus, we would consider the medium-term outlook to be positive.
That said, before the next leg north, we see decent chances for the price to correct lower. A clear dip below 295.50 could confirm the case and may allow declines towards the 284.15 barrier, which is defined as a support by the lows of September 30th and October 5th, as well as by the inside swing high of September 16th. Near that zone, investors may decide to jump back into the action and aim for another test at the stock’s all-time high of 302.60. A break higher would confirm a forthcoming higher high and would take the price into uncharted territory.
Shifting attention to our short-term oscillators, we see that the RSI has topped near its 70 line, while the MACD, although positive, has topped as well and appears ready to fall below its trigger line. Both indicators detect slowing upside momentum and enhance our view for a potential corrective retreat before the next positive leg.
We will abandon the bullish case only if we see a decisive dip below 253.90. The rate would already be below the aforementioned upside line and investors may decide to allow the slide to continue towards the 241.00 area, marked by the lows of July 14th and 16th. Another break, below 241.00, may see scope for extensions towards the 231.50 hurdle, defined as a support by the peak of June 24th.
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