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Alibaba Expects Further Declines


Alibaba (NYSE: BABA) advances in a mid-term corrective structure that suggests further declines in the coming trading sessions.

The short-term picture of BABA, in its hourly chart, exposes an Elliott wave corrective sequence in progress, which topped at $231.14 per share in last January 13th, when the price completed its wave ((iii)) of Minute degree labeled in black.

Once BABA topped at $231.14, the price action failed its advance, reaching a lower high at $226.46 per share on February 05th in the fifth wave of Minute degree. With this five-wave sequence completion, Alibaba ended the fifth wave of Minor degree labeled in green, and at the same time, the third wave of Intermediate degree identified in blue. According to the Elliott wave theory, the fifth wave failure tends to occur when the market realized an extended third wave.

After the third wave of Intermediate degree completion, Alibaba began to develop the fourth wave of the same degree. This Elliott wave structure currently in progress looks incomplete. Until now, BABA completed the wave A of Minor degree in green on March 23rd at $169.98 per share, from where the price started to advance in its wave B in green, developing a double three correction.

The textbook defines a double three pattern as a complex correction that combines two corrective structures and is connected by another wave identified as wave X. The double three follows a subdivision as a 3-3-3 sequence.

The descending channel plotted from the top at $231.14 per share and connected with the end of wave B at $221.14 drive us to observe that Alibaba should develop a new decline corresponding to wave C of Minor degree in green. On the other hand, in the previous chart, we observe that wave B developed a chartist pattern identified as an ascending wedge, which, according to its configuration, looks like a bearish continuation pattern.

Considering the oversold observed in the RSI oscillator, in the following trading sessions, Alibaba could develop a limited recovery, which should precede a new massive sell-off with a potential target in the March low at $169.98 per share.
In conclusion, in the short-term, our preferred positioning remains in the bearish side until wave 4 of Intermediate degree completion. Once the long-term correction ends, we will look for long-side positioning.

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Source: https://www.cryptorocket.com/news/alibaba-expects-further-declines/
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