Alibaba (BABA) still in a correction

We last highlighted Alibaba (BABA) in this blog on October 22, and the stock remains within a corrective phase. This post updates our view and flags the risk of a 1-month bearish head and shoulders pattern.

Alibaba (BABA): Watch key supports for post-breakout corrective phase

The early September breakouts above 134 and 145 completed a late 2021-late 2025 big base for BABA. This breakout established upside potential toward the 50% and 61.8% retracements of the late 2020–late 2022 decline at 188–189 and 219–220, respectively. BABA reached the 50% retracement target with a rally to 192.67 in early October before entering a corrective phase.

Whether BABA can achieve the 61.8% retracement target (219–220) depends on its ability to hold key supports and maintain the integrity of its base breakout. The first support zone is 158–155, defined by near-term retracements and successfully defended so far. However, the mild rebound following a large black weekly candle (week of 10/10) leaves open the risk of a deeper pullback toward the original breakout levels at 145 and 134.

These breakout points align closely with the 50% and 61.8% retracements of the April–October rally at 144 and 132, respectively, reinforcing 145 down to 134 as major technical support for the stock. Staying above or holding this area would keep BABA’s long-term bullish base breakout intact and preserve the path toward 219–220.

Chart 1: Alibaba (BABA) (top) and relative to the S&P 500 (bottom)

BABA: A 1-month bearish H&S pattern could confirm risk to 147 and 140

BABA has dropped below its 13-, 26-, and 40-day moving averages (DMAs), which have rolled over to confirm the stock's corrective phase. While below these DMAs at 169.79-171.58, the risk is for a right shoulder of a 1-month bearish head and shoulders (H&S) pattern. A decisive loss of 160.61-157.25 (neckline, 61.8% extension, and the October 10 low) would confirm this bearish setup and suggest risk to 147 (100% downside extension - aka measured move) and 140 (H&S breakdown target).

Chart 2: Alibaba (BABA)