Stock of the day: Alibaba
16 June 2023
Alibaba's performance in the first half of June has shown some encouraging signs for investors, despite the stock's continued overall downtrend that began in October 2020. The most recent development is Alibaba's price escaping from a wedge formation (highlighted by black lines on the chart) that began forming in December 2022. This breakout occurred this week, with the price opening and closing above the upper line of the wedge on Tuesday.
Subsequent trading days (Wednesday and Thursday) maintained the bullish sentiment, with the stock setting higher highs and higher lows. Given this momentum, it seems plausible that the price could continue to rally towards the yellow resistance level at $122.
However, investors should remain cautious. The buy signal that this breakout represents would be negated if the price were to break below the green uptrend line. Although the chances of this occurring appear to be relatively low right now, the possibility still exists and should be considered in any investment decisions.