Alibaba Stock Falls 3.24% as Bearish Candlestick Pattern Signals Potential Breakdown Below Key Support at $163.495

Alibaba Group (BABA) closed the most recent session with a 3.24% decline to $165.40, signaling bearish momentum. The candlestick pattern suggests a potential breakdown, with the price testing key support at the $163.495 level identified in prior sessions. A bearish engulfing pattern is evident as the recent candle's body fully encompasses the previous day's bullish candle, reinforcing short-term weakness. Resistance remains at $170.93, where the stock previously stalled before this selloff.

Candlestick Theory

The recent price action forms a bearish continuation pattern, with the $163.495 support level critical for near-term direction. A break below this level may trigger a retest of the $150.86–$152.24 consolidation range from late December 2025, which could act as a secondary support. Conversely, a rejection above $163.495 and a close above $167.01 (a prior intraday high) might hint at a short-term reversal, though bearish momentum remains dominant.

Moving Average Theory

The 50-day MA (~$168.50) has crossed below the 200-day MA (~$169.00), forming a bearish death cross. The 100-day MA (~$170.00) further reinforces the downtrend, with all three indicators trending lower. Short-term traders may monitor the 50-day MA as a dynamic support; a break below it would confirm a deeper correction toward the 200-day MA. The 200-day MA remains a critical psychological level, as a sustained close beneath it could trigger broader market skepticism.

MACD & KDJ Indicators

The MACD line (-$2.50) has crossed below the signal line (-$1.80), with the histogram expanding, indicating strengthening bearish momentum. The KDJ stochastic oscillator shows %K at 15 and %D at 20, entering oversold territory. However, divergence between %K and %D is absent, suggesting the oversold condition may persist without immediate reversal. A bullish crossover in KDJ would require a rebound above $167.01 to validate a short-term bottom.

Bollinger Bands

Volatility has expanded, with the price near the lower band at $163.495. The bands’ width reflects heightened uncertainty, often preceding a breakout or breakdown. A close below the lower band may trigger further selling, while a retest of the upper band ($173.30) could face immediate resistance. The midpoint of the bands (~$168.50) aligns with the 50-day MA, making it a pivotal level for trend continuation.

Volume-Price Relationship

Volume surged to $3.04 billion on the recent decline, validating the bearish move. High volume during a breakdown below $163.495 would strengthen the case for a deeper correction. Conversely, declining volume during subsequent rallies might indicate waning bearish conviction. The recent session’s volume is 18.38 million shares, above the 30-day average, underscoring the selloff’s credibility.

Relative Strength Index (RSI)

The RSI stands at 25, confirming an oversold condition. While this typically signals potential for a bounce, the broader bearish trend (death cross, declining MAs) suggests the oversold reading may persist. A close above $167.01 could push RSI above 30, but a sustained move above 50 would require a strong reversal above $170.93. Traders should note that RSI in oversold zones can remain depressed during strong downtrends.

Fibonacci Retracement

Applying Fibonacci levels from the January 12, 2026, high ($167.69) to the January 16, 2026, low ($163.495), key retracement levels include 38.2% at $165.70 and 61.8% at $164.70. The current price near $165.40 is testing the 38.2% level, which may offer temporary support. A break below 61.8% could target the $163.495 confluence zone, followed by the 78.6% level at $163.70 if the selloff accelerates.

Confluence and Divergence

Confluence is strong at the $163.495 support level, where Fibonacci, Bollinger Bands, and prior price action align. The RSI’s oversold reading and KDJ’s bearish signal add to the case for a short-term bounce. Divergence is minimal; however, a divergence between RSI and price during a rally above $167.01 would warrant caution. The MACD’s bearish momentum and declining MAs suggest the downtrend is structurally intact unless a bullish crossover occurs.