BABA LONG - Breakout of falling wedge

2 ביולי 2023

Many people have shared analyses online of BABA having formed a descending triangle since January, which was used as a bear case for BABA falling to a new all time low, or making a double bottom before starting it's next bull run.

If you look at the chart I've shared you'll see an alternative analysis, with a trend line acting the the bottom of a falling wedge pattern (that the stock broke out of to the upside last week), which has significance as support and resistance going all the way back to Oct 2021.

WHITE LINE = Inverse H&S Neckline

ORANGE LINES = Height of the Inverse H&S, and subsequent breakout move of an equal height

PURPLE LINES = Height of the falling wedge, and subsequent breakout move of an equal height

YELLOW LINES = top trend lines of 2 separate falling wedge patterns that occurred in 2022, and the most recent from January to June 2023

**PINK LINES = bottom trend lines of the falling wedges - see the comments in my post for more details

**The Blue and Green arrows show how this bottom trend line (top pink line) of the falling wedge that BABA just broke out of has acted as either support or resistance since Oct 2021.
It was first support in October 2021, immediately before the stock crashed through at the end of that year to beginning the bottoming process that has played out since then.

Over the following year the line then acted as resistance with multiple failed breakouts.

After the capitulation in late Oct 2022, the stock rallied up to this line, and consolidated along it for a few weeks before breaking out to its high in the low 120s.

Since this breakout the line has acted as support, indicating to me that we are in the final phase of the bottoming process, which is confirmed by the breakout of the falling wedge last week.

The stock price is currently 'checking back' to the top of that wedge, at very low volume (as is typical for a wedge breakout), before I expect we will see the next leg up for a test of the support levels ~100$, and an attempt at breaking the WHITE neckline of the inverse head and shoulders.

A measured move of the inverse head and shoulders would then take the price up into the 180s over the next number of months.

Not advice, do your own due diligence. Fingers crossed, and good luck to the longs!

2 ביולי 2023

הערה

Also, there is a hidden bullish divergence forming on the Stochastic, with the indicator being more oversold now, than during the previous low at the end of May, while the stock price is considerably higher than at that point, where it was in the high 70s.

Stochastic is known to lead other indicators, giving me the impression that a reversal is imminent, when factoring in the wedge breakout analysis mentioned above.