Alibaba Shares Jump 4.18% Extending 12.36% Three-Day Rally Amid Bullish Technicals

Alibaba Group (BABA) shares surged 4.18% in the latest session, extending a three-day rally totaling 12.36%. This aggressive upward move forms the backdrop for our technical assessment, integrating multiple indicators to gauge sustainability and future directional probabilities.
Candlestick Theory
Recent price action reveals a robust bullish sequence, characterized by three consecutive long green candles with progressively higher highs and lows. The long lower wick on the September 4th session (-4.05% close) signaled rejection of sub-$130 prices, establishing initial support near $130-$132. Current consolidation near $148 aligns with the yearly peak from March, marking a critical resistance zone. A decisive close above $148 would breach the 2025 ceiling, while failure here may trigger profit-taking.
Moving Average Theory
The 50-day MA has crossed bullishly above both the 100-day and 200-day MAs, confirming a major trend reversal. Prices trade significantly above all three key moving averages, with the 50-day ($126), 100-day ($118), and 200-day ($110) stacked bullishly – indicative of sustained upward momentum. This configuration suggests the long-term trend has turned positive, though the extended distance between price and the 50-day MA warrants monitoring for potential mean-reversion pullbacks.
MACD & KDJ Indicators
MACD maintains a bullish stance with the histogram expanding above the zero line. The MACD line itself shows no bearish divergence despite the steep ascent, reinforcing trend strength. Meanwhile, the KDJ's J-line exceeds 80 – traditionally signaling overbought conditions. While this doesn't preclude further gains, it flags increased susceptibility to short-term consolidation. The K-line (84) remains above the D-line (76), preserving the current buy signal despite stretched levels.
Bollinger Bands
The bands are undergoing notable expansion after an August-September contraction phase, reflecting increasing volatility. Price rides the upper Bollinger Band ($146), a sign of directional strength that typically persists until the price closes back inside the bands. Traders should monitor band width for stabilization, as sustained expansion could prolong the trend, while contraction would hint at exhaustion.
Volume-Price Relationship
The August 29th surge (+12.9% on 82M shares, the year's highest volume) validated the breakout. However, the recent 12.36% rally occurred on comparatively lower volume (19M-32M shares), introducing a sustainability concern. Bulls require volume expansion above the 50-day average (∼25M shares) on subsequent up days to confirm institutional participation. Current accumulation appears retail-driven, necessitating confirmation.
Relative Strength Index (RSI)
The daily RSI reading of 78 indicates significantly overbought territory. While not an automatic reversal signal in strong trends, it elevates near-term corrective risks. Historically, readings above 75 since March have preceded 5-8% pullbacks. The absence of bearish divergence provides some buffer, but conservative entries are better timed during RSI retracements toward the neutral 50 level.
Fibonacci Retracement
Applying Fib levels to the July 15th low ($116.97) and September 9th high ($148) reveals critical thresholds: The 23.6% retracement at $139 offers initial support, aligning with the August 29th breakout close ($135). More significant confluence appears at $132 (38.2% retracement), which intersects with the 50-day MA and the September 4th reversal low – establishing a high-probability demand zone should profit-taking intensify.
Conclusively, Alibaba Group's technical structure favors continued bullish bias above $139, supported by moving average alignment and MACD confirmation. Key confluences appear at the $132 support zone, merging Fibonacci, moving averages, and prior price reversal points. Divergence emerges in short-term oscillators (RSI at 78, KDJ J-line >80) signaling overheating risks against strong trend indicators. Prudent strategy suggests awaiting either a breakout confirmation above $148 with volume expansion or a pullback toward $139-$132 for improved risk-reward positioning. Bollinger Band expansion implies volatile swings remain probable in the near term.