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Alibaba shares slide amid investor fear and impending rate hikes: Keep an eye on this trend – Alibaba Group Holding (NYSE:BABA)

Alibaba Group Holdings, Inc. BABA opened lower and continued to slide intraday, falling more than 3.5% in early afternoon Wednesday.

The Hang Seng closed down 1.79% at HKD 336.80, adding pressure on Alibaba and a number of other blue chip Chinese stocks.

The consumer price index data published by the US Department of Labor Inflation last week remained high above expectations in August, despite four separate rate hikes initiated in March, May, June and July. The news raised fears that the Federal Reserve could raise rates by 0.75% or even a full percentage point.

The prospect of another significant rate hike has fueled fears of a drying up of liquidity in Chinese markets. Unlike the United States, the Chinese government is reviving the economy through quantitative easing.

The yuan also fell to its lowest level in 26 months amid China’s continued strict controls against COVID-19.

Alibaba’s most recent downtrend started on August 26th. Wednesday’s bearish price action is both a continuation of the downtrend and a break from a bearish flag pattern.

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Alibaba’s chart: Within the downtrend, Alibaba’s most recent lower high was formed on Tuesday at $88.73 and the most recent confirmed low was printed at $85 the previous day. Eventually, Alibaba will find another temporary low and rebound, most likely to print another lower high.

  • The recent decline between Sept. 12 and 19, coupled with Monday and Tuesday’s rebound, put Alibaba in a bearish flag setup on the daily chart, the stock of which has broken down in average volume. The measured movement of the flag is 10%, which indicates that Alibaba could fall towards $80.
  • If Alibaba closes the trading day near its daily low, the stock will print a bearish candlestick, which could indicate that lower prices are in the charts for Thursday. If the stock rebounds to form a lower wick, Alibaba will print a hammer candlestick, which could indicate a rebound is on the horizon.
  • Alibaba has resistance above $83.84 and $89.95 and support below $80 and $73.28.

See also: How to read candlestick charts for beginners

Photo: Courtesy of alibaba.com