Alibaba Stock Drops 3.85% as Bearish Signals Dominate Technical Outlook

Alibaba Group (BABA) experienced a notable 3.85% decline in the most recent trading session, closing at 103.83. This analysis examines BABA's technical posture through multiple methodologies to identify key trends and potential inflection points.
Candlestick Theory
Recent price action shows a concerning bearish engulfing pattern formed on July 9, where the session’s high (105.525) failed to breach the prior day’s close (107.99), signaling strong selling pressure. Key resistance now emerges near 107.99–108.70 (July 3–8 highs), while critical support resides at 103.71 (July 9 low). A breach below 103.71 could trigger further downside toward the psychological 100.00 level.
Moving Average Theory
The 50-day moving average (approx. 112.30) has crossed below both the 100-day (approx. 118.50) and 200-day (approx. 105.00), confirming a bearish medium-term trend. Price currently trades below all three key MAs, with the 200-day MA near 105.00 acting as immediate resistance. Sustained trading below the 200-day MA may accelerate selling pressure, though a reversal above it could signal near-term consolidation.
MACD & KDJ Indicators
The MACD histogram remains in negative territory with both signal line and MACD below zero, reinforcing bearish momentum. Concurrently, the KDJ oscillator shows an oversold reading (K: 18, D: 22, J: 10), though no bullish divergence is present. While oversold KDJ readings often precede bounces, the lack of MACD convergence suggests limited reversal potential in the immediate term.
Bollinger Bands
Bollinger Bands have contracted significantly (20-day bandwidth at 4% vs. 8% in May), indicating subdued volatility. Price is currently testing the lower band near 103.50, which often acts as temporary support. A sustained break below this band may trigger a volatility expansion and continued downtrend, while a rebound toward the middle band (107.00) could signal consolidation.
Volume-Price Relationship
The July 9 decline occurred on elevated volume (24.5M shares vs. 20-day avg 15.7M), validating bearish conviction. Notably, distribution patterns emerged during the June-July downtrend, with higher volume accompanying down days than up days. This volume asymmetry underscores persistent selling pressure, though climactic volume near 103.00 could indicate capitulation.
Relative Strength Index
The 14-day RSI reads 31, approaching oversold territory. While historically levels below 30 have preceded rallies (e.g., January and October 2024), the indicator has lingered near oversold levels since mid-June without meaningful recovery. This persistent weakness warrants caution, as oversold readings can extend during strong downtrends. A decisive move above 35 would be the first sign of stabilization.
Fibonacci Retracement
Applying Fibonacci to the April-June rally (low: 95.46, high: 134.05), key retracement levels include 114.76 (38.2%) and 106.00 (61.8%). Current price hovers near the 61.8% retracement, which aligns with the July 9 low. Confluence exists here as this level coincides with the psychological 105.00 support and the lower Bollinger Band. A failure to hold 106.00 could open downside toward 98.00 (78.6% retracement).
Confluence and Divergence
Significant confluence appears at the 105.00–106.00 zone, merging the 200-day MA, Fibonacci 61.8% retracement, and Bollinger lower band. This cluster represents a critical battle area for bulls. However, bearish divergence persists between oversold oscillators (KDJ/RSI) and unrelenting price declines, suggesting weak momentum recovery signals. Watch for volume-backed reversal candles near 105.00 to confirm potential bottoming, while a breakdown targets 100.00 next support.