Could Alibaba Stock Be Doomed To Drop?

Alibaba Group Holdings LTD. BABA shares fell lower Thursday, likely as a result of the medical data group LinkDoc Technology calling off its U.S. initial public offering at the last minute. Linkdoc is backed by Alibaba Health Information.

Alibaba stock was also trending on social media sites such as StockTwits and Reddit.

Alibaba was trading down 3.7% at $200.30 at last check.

Alibaba Daily Chart Analysis

• Shares look to have broken out of the bottom of a descending triangle pattern and could be due for more of a drop.
• The stock is trading below both the 50-day moving average (green), and the 200-day moving average (blue), indicating sentiment in the stock has been bearish..
• Each of these moving averages may hold as a possible area of resistance in the future.

Key Alibaba Levels To Watch

• Alibaba has been downtrending in the last few months and trades in a descending triangle pattern with a flat bottom support.
• The support line in the pattern looked to be near the $220 level and now looks as though it may have been broken.
• The stock retested the $220 level as resistance and was unable to break above the level and hold again; this hints that the stock may be ready to dip even more.

What’s Next For Alibaba?

Bullish traders would like to see the stock bounce and start heading back up. Bulls want to see the stock form higher lows and cross back above the $220 price level. Bulls would also like to see the stock cross back above the moving averages for a potential trend change.

Bearish traders would like to see the stock continue to hold the $220 level as resistance. They would also like to see the stock be able to hold below pattern resistance. Bears have control of the stock right now and they would like to maintain control by staying below the critical levels and moving averages.