Alibaba Group Holding Ltd. (BABA) corrected to the downside from June to October. We saw a bounce in November and a successful retest in late December and early January. Prices are now on a stronger footing so let's see if we have more on the upside.
In this daily bar chart of BABA, below, we can see the double-bottom in October and December. Prices recently broke above the December high and the bottoming 200-day moving average line to "complete" the pattern. Prices have been above the rising 50-day moving average line since early January. The daily On-Balance-Volume (OBV) line has been firming since the end of December suggesting that the selling pressure seen since June is over and new accumulation is under way. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line in a bullish configuration since the middle of January.
In this weekly bar chart of BABA, below, we can see that prices are just slightly above the declining 40-week moving average line. The weekly OBV line is firmer and the MACD oscillator signaled a cover shorts buy signal last month.
In this Point and Figure chart of BABA, below, we can see an upside breakout at $170.70 and an upside price target of $197.61.
Bottom line strategy: BABA could make a shallow dip in the near-term after its $40 rally from late December. This dip, should it occur, is likely to be a buying opportunity for further gains in the weeks ahead. Risk below $150. $200 is our price target.