BABA Stock Continues Its Progress Towards Its $180.00 Target

BABA Stock
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BABA Stock: Geared Towards Higher Stock Prices

Alibaba Group Holding Ltd (NYSE:BABA) stock gapped higher on June 8, 2017, following an Investor Day conference during which the company presented outstanding sales projections where revenue is expected to grow between 45%-49% in the next fiscal year. On that fateful day, BABA stock forged a high at $145.00 that it has been trading under for four weeks, until it was finally able to surpass this level, which suggests that higher Alibaba stock prices are now on the horizon. Of course, this bullish projection is really no surprise because I continue to hold a preliminary bullish price objective of $180.00 on this investment.

My projection and views on BABA stock have been quite accurate and I have to thank the method of analysis that I employ to generate these projections and views. This method of investment analysis is known as technical analysis, and it is predicated on analyzing historical price data in order to project where the stock price is heading next.

This price chart highlights a technical price pattern known as a “double bottom.” This pattern is identified by two consecutive lows that are separated by a peak in between. These patterns serve to suggest that a bearish trend is transitioning into a bullish one, and it is why double bottom price patterns are also trend reversal patterns.

I have been bullish on BABA stock for quite some time, and the following stock chart illustrates the price pattern that first initiated my bullish view on this investment.

Chart courtesy of StockCharts.com

This pattern is confirmed when the stock price crosses over the peak that separated the two bottoms. In August 2016, BABA stock accomplished this feat in dramatic fashion as the stock price gapped after closing above the peak that confirmed a bottom was in place. This price gap actually reinforced the bullish repercussions suggested by the trend reversal pattern because a breakaway gap suggests that a new bullish trend is now in development.

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The preliminary price objective of this double bottom trend reversal pattern was $110.00, which was obtained by taking the depth of the double bottom pattern and projecting that value above the peak that separated the two bottoms.

The following Alibaba stock chart illustrates the trading action that followed the double bottom reversal pattern.

BABA price stock

Chart courtesy of StockCharts.com

This Alibaba stock chart clearly shows that when the stock price breached the peak that separated the two bottoms, a significant rally ensued. This rally stalled just below $110.00, which was the price objective suggested by the trend reversal pattern.

The stock price then proceeded to sell off and the share price finally found its footing after it tested the peak that initiated a bullish view in the first place. Once this level was successfully tested from above, a significant rally ensued, and 2017 has turned out to be a stellar year for BABA stock as the trend towards higher prices has been relentless.

This price chart illustrates the gap that occurred on June 8, 2017, and now that that high has been cleared, higher stock prices are likely to follow. This price gap is labeled as a continuation gap because gaps such as this one have a tendency to mark the midpoint in a bullish trend. This price gap reinforces the $180.00 price target that is being suggested by the following Alibaba stock chart.

alibaba stock chart

Chart courtesy of StockCharts.com

This BABA stock chart illustrates the trading action of this investment since inception.

In May of this year, Alibaba shares breached the previous all-time high that was established shortly after the company first began trading publicly. This feat reinforces and reaffirms any and all bullish views on this investment.

Breaking above a previous all-time high that was set shortly after a company begins trading publicly is a characteristic that has accompanied some of the best-performing investments. Facebook Inc (NASDAQ:FB), Shopify Inc (US)(NYSE:SHOP), and Applied Optoelectronics Inc (NASDAQ:AAOI) are just to name a few. One thing that these stocks share in common is that once the previous all-time high is breached, the potential upside that follows is tremendous.

The preliminary price objective suggested by breaking above the previous all-time high is $180.00. This price objective was obtained by taking the depth of the price pattern and extrapolating that value above the previous all-time high.

I have mentioned in previous publications that this $180.00 price objective is just a preliminary level because this price pattern has a tendency to blow right through that level and continue its ascent towards higher prices.

Bottom Line on BABA Stock

I am very bullish on Alibaba stock. Its current advance that has taken out the high that was created on June 8 reaffirms the notion that the stock is set to continue its ascent towards higher stock prices. I will continue to hold a bullish view on BABA stock until the stock charts give me reason to believe that another view is warranted.