Alibaba Gains 4.91% as Bullish Candlestick and Golden Cross Signal Strong Buying Pressure

Alibaba Group (BABA) is currently trading at $166.81, with a 4.91% gain in the most recent session. The candlestick pattern formed by the recent session—a long bullish body with a small upper shadow—suggests strong buying pressure. Key support levels are identified at $157.25 (2025-10-10 low) and $163.08 (2025-09-23 low), while resistance lies at $168.79 (2025-10-10 high) and $173.68 (2025-09-09 high). The price action above the 200-day moving average (calculated at approximately $160) and the 50-day MA ($165.50) indicates a bullish trend, though the 100-day MA ($163.30) suggests a potential consolidation phase.

Moving Average Theory

The 50-day MA crossing above the 100-day and 200-day MAs (a "golden cross") reinforces the short-term bullish bias. The 50-day MA at $165.50 acts as dynamic support, while the 200-day MA at $160 provides a baseline for trend confirmation. However, the 100-day MA at $163.30 and the 200-day MA at $160 suggest that the stock may face a test of its 50-day MA before confirming a sustained uptrend. Confluence between the 50-day MA and Fibonacci retracement levels (discussed later) at $166.81 further strengthens the case for continued buying.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the MACD line crossing above the signal line—a potential buy signal. The KDJ oscillator (K at 78, D at 72) indicates overbought conditions, aligning with the RSI’s 75 reading. This suggests a high probability of a short-term pullback, though the divergence between the MACD’s bullish momentum and the KDJ/RSI overbought levels may signal a continuation of the uptrend if volume remains strong.

Bollinger Bands

Price is currently near the upper Bollinger Band ($168.79), indicating overbought conditions and a potential reversal. The band width has expanded recently, reflecting heightened volatility. A break below the middle band ($164.50) could trigger a retest of the lower band ($160.30), but the recent volume surge (25.7 million shares traded on 2025-10-13) supports the likelihood of a bounce.

Volume-Price Relationship

The recent 4.91% rally occurred on elevated volume (25.7 million shares), validating the strength of the move. However, volume has declined in subsequent sessions, suggesting reduced conviction. A follow-through surge above $168.79 would require a corresponding volume spike to confirm sustainability. The divergence between price and volume during the 2025-09-24–2025-10-10 rally indicates weakening momentum, raising caution about overextending long positions.

RSI and Fibonacci Retracement

The 14-day RSI at 75 signals overbought conditions, with a 30–40% probability of a correction. Fibonacci retracement levels derived from the 2025-09-24 low ($162.8) and 2025-10-02 high ($189.34) highlight critical areas: the 38.2% level ($176.8) and 50% level ($176.0). A break above $176.8 would target the 61.8% level ($175.2), but a failure to hold $166.81 could trigger a retest of the 38.2% support ($165.3).

Backtest Hypothesis

The MACD Golden Cross strategy with a 5-day holding period (2022–2025) underperformed the benchmark, delivering a 25.37% return versus BABA’s 48.06% total return. This suggests the strategy’s short-term focus conflicts with the stock’s structural growth drivers (e.g., AI and cloud investments). The confluence of overbought RSI/RSI and bullish MACD signals in the latest session implies a high-risk, high-reward setup, but the backtest results caution against relying on this approach. A longer-term holding period or alignment with fundamental catalysts may improve outcomes.