Alibaba Group Holding Limited, through its subsidiaries, operates as an online and mobile commerce company in the People’s Republic of China and internationally. The company operates in four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others.
Take a look at the 1-year chart of Alibaba (NYSE: BABA) below with the added notations:
After trending lower since the June peak, BABA formed a double bottom (green) price pattern. Bottoming, rallying up to a point, selling back off to a similar bottom, and then rallying back up again forms the pattern. As with any price pattern, a confirmation of the pattern is needed.
BABA confirmed the pattern yesterday by breaking up through the $170 resistance (blue) that was created by the double bottom pattern.
The Tale of the Tape: BABA has confirmed a double bottom price pattern. A long trade could be entered on a pullback down to the $170 level with a stop placed under that level.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT