Technical Analysis – Alibaba stock rushes to recoup losses ahead of Q2 earnings release

Christina Parthenidou, XM Investment Research Desk

Alibaba’s stock price found enough footing near the 23.6% Fibonacci of the 147.82-179.33 upleg to surge above the 20-period simple moving average (SMA) in the four-hour chart.

The rising MACD and the positive slope in the RSI, which is ready to exit the bearish territory, are encouraging signs for the market’s short-term performance.

Should the 61.8% Fibonacci of 167.28 open the gate to the bulls, the 50-period SMA at 169.25 could next take control. Slightly higher, the area between 172.00 and 175.00, which encapsulates the 200-period SMA and the upper surface of the Ichimoku may prove a tougher obstacle to get through. In case of a successful breakup, the rally could get additional legs until the 179.33 peak.

On the downside, the market will retest the 38.2% Fibonacci of 159.80 before heading to the 23.6% Fibonacci of 155.20. If the latter is breached, the price may revisit its 2-month low of 151.75, while beneath May 5’s trough of 147.82, the way would open towards the 143.50-139.00 restrictive zone.

Note that Alibaba Group Holdings Ltd is scheduled to report earnings for the June quarter on Thursday before the US stock market opens.