BABA closes below its opening price unable to hold early session gains
Alibaba Group Holding Limited (BABA) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving higher for the 4th day in a row, BABA ended Wednesday at 278.14 edging higher $0.18 (0.06%), outperforming the S&P 500 (-0.46%). Trading $2.58 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (BABA as at Sep 16, 2020):
Wednesday's trading range has been $5.61 (2.0%), that's below the last trading month's daily average range of $7.71. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for BABA.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on September 10th, BABA actually gained 1.52% on the following trading day.
Alibaba Group closed back below the 20-day moving average at 278.45.
Though the share is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Alibaba Group. Out of 217 times, BABA closed higher 55.30% 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 10 trading days, showing a win rate of 58.53% with an average market move of 1.14%.