Alibaba Short-term Technical Analysis: Hidden Rebound Opportunities Amid Divergent Indicators

The stock price has been continuously volatile recently, with the latest price at NT$132.1, down 0.83%. From the trend perspective, the stock price has fallen below key moving averages, including the 10-day line (NT$133.94), the 30-day line (NT$151.06), and the 60-day line (NT$151.77). This indicates that short-, medium-, and long-term trends are all under pressure, with a bearish technical pattern. The stock price is currently trading below the moving averages, and if it fails to recover quickly, it may further test support levels.

In terms of technical signals, the Relative Strength Index (RSI) is currently at 37, near the oversold region but not extreme, suggesting selling pressure may gradually ease. Both the Stochastic Oscillator and CCI are showing neutral signals, reflecting a consolidating phase with balanced market sentiment. However, the overall technical indicator summary gives a 'buy' signal with an intensity of 8, mainly due to a buy signal from the momentum oscillator. Investors should be cautious as other trend indicators like the Average Directional Index (ADX), Bull/Bear Power Indicator, Ichimoku Cloud, Moving Average Convergence Divergence (MACD), and Bollinger Bands all show 'sell' signals, indicating that the medium- to long-term trend remains unclear and there's significant market divergence.

Regarding support and resistance levels, the primary support is located at HKD 126.8, with secondary support at HKD 115.8. The primary resistance is at HKD 144.4, with secondary resistance at HKD 156.4. The current stock price of HKD 133.2 is close to Support Level 1. If it can stabilize above this level, there may be short-term rebound opportunities, targeting Resistance Level 1 at HKD 144.4. Conversely, if it breaks below Support Level 1, it may test Support Level 2, which would further weaken the technical pattern.

In summary, although Alibaba shows some short-term technical buy signals, multiple trend indicators remain bearish, and the stock price is constrained by moving average resistance. Investors should exercise caution. The probability of an upward move is 55%, with a 5-day volatility of 8.3%, indicating relatively high fluctuations suitable for short-term trading. In conclusion, the divergence in technical indicator signals suggests the market is at a critical turning point. Professional investors might consider light positioning near support levels, setting a stop-loss below Support Level 2, and closely monitoring whether the stock price can break through moving average resistance to confirm a strengthening trend. A short-term rebound is possible, but the medium-term trend still requires volume confirmation and further improvement in indicators for optimism.

Alibaba Derivatives Data

The most concentrated trading range for Alibaba call warrants was between HKD 160-170, accounting for 32.8% of the total call warrant turnover. The average out-of-the-money level for this range was 24.2%, making it a moderately out-of-the-money product with an actual leverage of about 7.2 times, a delta of 25%, implied volatility of 45.8%, and an average time to maturity of 4.5 months.

Put warrant trading was concentrated in the HKD 125-130 range, accounting for 47.2%. The average out-of-the-money level for this range was 4.5%, categorizing it as slightly out-of-the-money products with an average actual leverage of 4.7 times, a delta of -38%, and average implied volatility of 43.9%. The time to expiration was around 3.5 months, with most products maturing between June-July 2026, classifying them as short-to-medium-term products.

These types of products are favored by investors mainly because they offer balanced cost-effectiveness, relatively moderate time decay, and are suitable for betting on medium-term rebound opportunities.

The most concentrated trading range for bull contracts was between HKD 120-130, accounting for 42.6% of total bull contract turnover. For bull contracts in the HKD 120-130 range, the average forced-recovery distance was 7.2%, the out-of-the-money level was 8.3%, and the actual leverage was approximately 11.3 times.

Bear contract trading was concentrated in the HKD 140-150 range, accounting for 58.3%. For bear contracts in the HKD 140-150 range, the average forced-recovery distance was 5.7%, the out-of-the-money level was 6.8%, and the actual leverage was approximately 14.7 times.

Such products are favored by investors primarily due to recovery distances of 5%-8% that can cover daily fluctuations, avoiding being easily forced to recover prematurely, while leverage greater than 10x amplifies returns.

Looking back at March 5, the underlying Alibaba shares rose 1.9% cumulatively over two days, driving impressive performance in related derivative products. Among these, $UB#ALIBARC2608F.C (54590.HK)$ rose 35% over two days, $UB#ALIBARC26074.C (53784.HK)$ rose 26%, $UBALIBA@EC2608F.C (26538.HK)$ 、 $BIALIBA@EC2608E.C (26562.HK)$ also recorded respective gains of 12% and 9%.

Investors who believe that the stock price will rebound at a key support level may focus on call warrants with a strike price near 150.09 yuan, such as$UBALIBA@EC2608F.C (26538.HK)$ or $BIALIBA@EC2608E.C (26562.HK)$, both of which offer approximately 5.5 times effective leverage, making them suitable for capturing potential upside when the stock price challenges resistance levels. Conversely, if you expect the stock price to fall below the support level and continue its downward trend, you can pay attention to put warrants with a strike price set at 129.9 yuan, such as$BIALIBA@EP2606A.P (20584.HK)$and$HSALIBA@EP2606A.P (20573.HK)$, which provide more than 5 times effective leverage, serving as tools for hedging downside risk or deploying bearish strategies.

Investors who prefer bull and bear certificates can make deployments based on their judgment of key price levels in the market. Optimistic investors may consider bull certificates with a stop-loss level set at 125 yuan, such as$UB#ALIBARC2608E.C (54572.HK)$ and $JP#ALIBARC2609A.C (54759.HK)$, which offer over 12 times higher actual leverage, with the latter being characterized by the lowest premium, allowing it to closely track the underlying stock's movements. Bearish investors may consider bear certificates with a stop-loss level set at 154 yuan, such as J.P. Morgan bear certificate$JP#ALIBARP2812L.P (64231.HK)$and$UB#ALIBARP2811F.P (65172.HK)$, both offering approximately 6.5 times actual leverage with relatively low premiums, making them suitable for capturing possible pullbacks if the stock price encounters resistance during a rebound.

Technical indicators currently show significant divergence. Do you think Alibaba’s current correction will break below the primary support level of 126.8 yuan? Feel free to share your insights in the comment section. For more market analysis, please keep following 'HK Stock Warrants Jenny' for daily updates!

Reminder: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. The market data, opinions, and analysis contained herein may change at any time without prior notice. We are not responsible for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive assessment of asset performance should be conducted using additional data. Decisions to trade should not be based solely on this article. Please note that past performance is not indicative of future results.

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