The Best Alibaba Stock Falls Near Key Support Levels

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Shares of Alibaba Group Holding Limited (BABA) fell almost 3% in early trading on Tuesday in a continuation of the downtrend that goes back to the end of July. The intensification of the trade war between the United States and China has led to concern of a slowdown in the volume of goods passing through the Alibaba market. Pinduoduo Inc. (PDD), a competitor, also went public on the NASDAQ in late July, raising $ 1.63 billion in the second-largest initial public offering by a Chinese company this year.

Despite bearish concerns, some investors have been building their stakes in Alibaba, while prices are cheap. Jana Partners was a buyer during the second quarter, according to its 13F SEC filing. Alibaba also continues to forge partnerships with companies, ranging from Ford Motor Company (F) to Starbucks Corporation (SBUX), while continuing to invest in artificial intelligence and other next-generation technologies to consolidate its position in the market. (SEE ALSO: How Starbucks can benefit from Alibaba Alliance.)

Technical table showing the performance of Alibaba Group Holding Limited (BABA)
From a technical point of view, Alibaba shares broke from a symmetrical triangle pattern in late July and S1 support to principios 179.41 in early August. The shares are trading near S2 support levels at $ 171.59 with a relative oversold Strength Index (RSI) at 32.12 and a bearish moving average convergence divergence (MACD). These indicators suggest that the stock could see some near-term consolidation before any downward movement.

Traders should be on the lookout for some consolidation between the S1 and S2 support levels in the short term. If the stock breaks from the S1 resistance, traders should be on the lookout for a move towards the 200-day moving average at $ 186.85. If the stock breaks down from the S2 support, the next major support is close to the trend line and the previous reaction lows of around $ 166.29.


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