BABA runs into sellers around 254.40 for the third day in a row
Alibaba Group Holding Limited (BABA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
BABA ended the month 16.37% higher at 251.02 after losing $1.72 (-0.68%) today, significantly underperforming the S&P 500 (0.77%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (BABA as at Jul 31, 2020):
Friday's trading range has been $6.30 (2.48%), that's slightly below the last trading month's daily average range of $7.08. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently notably lower than usual for BABA. Prices continued to consolidate within a tight trading range between 245.81 and 254.40 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. Despite a strong opening the market closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
After trading as low as 248.10 during the day, Alibaba Group found support at the 20-day moving average at 250.86. Unable to break through the key technical resistance level at 254.30 (R1), the stock closed below it after spiking up to 254.40 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. The share ran into sellers again today around 254.40 for the third trading day in a row after having found sellers at 253.86 in the previous session and at 254.30 two days ago. The last time this happened on July 1st, BABA actually gained 3.54% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 20" stand out. Its common bullish interpretation has been confirmed for Alibaba Group. Out of 39 times, BABA closed higher 61.54% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after seven trading days, showing a win rate of 53.85% with an average market move of 0.06%.