Alibaba Group Holding Ltd (NYSE: BABA)

Alibaba Group Holding Limited, through its subsidiaries, operates as an online and mobile commerce company in the People’s Republic of China and internationally.

Take a look at the 1-year chart of Alibaba (NYSE: BABA) with the added notations:

BABA has a key level of support at $165 (green).  The stock might be making its way back down to that level again, and traders should be able to expect some sort of a bounce from there. However, if the $165 support level were to break, lower prices should follow.

The Tale of the Tape: BABA has key support at $165. A trader could enter a long position at or around $165 with a stop placed under the level. If the stock were to break below the support, a short position could be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT