Alibaba Group Holding Ltd. (BABA) shares rallied last week and recaptured the both the 50-day SMA and longer-term support. The bullish move was triggered after the PBOC intervened and supported the yuan currency. China’s central bank reportedly is considering increasing CNY currency rate expectation management in 2017 and would not tolerate sustained depreciation of yuan.
Price action on the BABA daily chart shows that the bullish move started once price surged above the 200-day SMA, which currently trades around the $88.81 level. Last week saw price close above both a downward sloping trendline that started back last October and the longer-term trend support line that began early last year. The current bullish stance might not find major resistance until the 100-day SMA, which currently trades at the $97.62 level. Further upside may target the century mark.
If we see downward pressure return, initial support will come from the $93.50 level. Major support remains the $86.00 level.
The Trade: Buy BABA at $93.50, with a stop loss at $92.50 and a take profit at $96.50. The Risk/Reward Ratio is 1:3