Why is Alibaba’s share price sliding today by more than 5% even as the company reports that shopping volumes are returning to pre-coronavirus levels? The answer lies in what has been the dominant headline today for the financial markets: the escalation of US-China tensions.
The UK, Canada and Australia have just issued a joint statement against the new proposals that China intends to use in making up a new Hong Kong national security law. This statement adds a further layer of opposition already voiced out by the US. Today, the Chairman of the White House Council of Economic Advisers Kevin Hassett said that the Chinese move could end up being detrimental to the Chinese economy.
While Alibaba continues to perform creditably well in the e-commerce space, it is finding it hard to shake off its Chinese origins and roots, as it features many suppliers and companies who could potentially take a hit if the US were to slam trade sanctions on Chinese interests.
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Technical Outlook for Alibaba
Alibaba share price on the daily chart appeared to have broken above the symmetrical triangle, but today’s steep decline has turned this move into a false breakout. As a result, the price has landed right back into the triangle. But with 90% of the move from base to apex nearly complete, Alibaba share price action looks like it will jump out of the triangle once more. If it breaks to the upside, possible targets could lie at 215.04 and 219.91 initially, with 210.67 constituting a brief pitstop.
A downside break takes Alibaba below 201.07, targeting 195.50 and possibly 189.64. The support at 182.26 may also come into the picture if markets react more negatively to the evolving US-China situation.
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