BABA: How high can it go?

Alibaba (BABA), the Chinese e-commerce and cloud computing company, is currently exhibiting technical behaviors that may warrant attention. The stock shows familiar impulsive patterns, with Fibonacci retracement levels suggesting the possibility of a move beyond the 0.5 level toward 0.618 or higher. When compared against the broader money supply (M2), BABA displays similar impulsive movements with well-defined resistance levels, indicating potential relative gains of 50–80% if momentum continues against M2. Overlaying these insights with BABA versus USD highlights the potential for key technical thresholds to be tested in the near term, potentially.

Time-based technical indicators provide further context. Weekly Stochastic RSI (SRSI) patterns suggest trends often emerge at the start and midpoints of the year, while historically, readings below 20 have preceded rebounds within 7–11 weeks; BABA is currently in the sixth week of this cycle. Taken together, these observations make a case for a potential move higher while also looking at pitfalls of this analysis.

BABA: Familiar impulsive patterns

The first chart highlights repeated impulsive patterns in BABA’s price, similar to those previously observed in other assets such as PALL. This pattern has been repeating for some time and has also been observed in the HSI. Given these similarities, it is worthwhile to consider how BABA might behave moving forward. BABA had impulsive rallies, breaking resistance levels, and then entering a phase of cool-off before a move higher. Whether this pattern will continue to repeat, remains to be seen, and at one point, it will surely deviate from its past behaviour.

Fibonacci analysis suggests that BABA could potentially break the 0.5 retracement level, with the next target area around 0.618 at 220 USD or higher.

BABA vs M2, the total money supply

When compared to the total money supply (M2), BABA shows similar impulsive movements but with clearer resistance levels, suggesting potential relative gains of 50–80% against M2 on a Fibonacci analysis if current patterns persist. It is worthwhile to also follow BABA/M2 since it shows clearer resistance levels than BABA vs USD. The performance on BABA/M2 could hint at what level BABA on its USD pair can reach.

For a constant M2, BABA could go above 220 USD, reinforcing the possibility that the stock could test the 0.5 Fibonacci level in the near term and even go slightly above the 0.618 level to 270 USD or so. This is a dubious speculation at best, since M2 is moving as the money supply grows. In any case, it could indicate potential levels where BABA might stall.

SRSI: time based considerations

Weekly Stochastic RSI (SRSI) data indicate that the last two impulsive moves on the SRSI and BABA occurred twice per year, once at the start (or end of the previous) year and mid-year, since the current trend started. While it is surely dubious to assume that two data points are enough for a trend to repeat, it is an interesting observation that could give an approximate idea when a new move on BABA could occur. Since 2026 just started at the time of writing, it will be important to track the SRSI if there is another impulsive rally or not, which could invalidate the observation if it does not behave like the past two times.

Historically, when the weekly SRSI dropped below 20, it often rebounded after 7–11 weeks or 2-3 months for simplicity; BABA is currently in the sixth week of such a cycle. This timing could suggest that a rebound may be on the horizon soon, though it is not guaranteed. If and when it happens remains to be seen. Based on this observation, BABA is approaching a timeframe where it could be likely for it to have a move higher soon, though if it happens, it could even take a month or longer based on historical data.

Conclusion

BABA could experience a rally higher soon. If, when and how high it could go remains to be seen. The SRSI analysis suggests that a rebound may occur in the near future, though it is not certain. If such a rally were to materialize, it could take it to 220 to 270 USD or so based on Fibonacci analysis and the BABA/M2 ratio. However, this is a speculative scenario and BABA might go higher than this or fall short of reaching such levels depending on how market conditions evolve in the future.

Pitfalls

Keep in mind that this is a dubious speculation that may or may not occur. BABA might be more bullish than the analysis of the article or more bearish depending on how market sentiment evolves in the future. Indicators do not tell the future with absolute certainty. They are useful to reason about the future, and it is important to balance both bullish and bearish scenarios to avoid bias as best as possible. Lastly, all indicators are prone to failure every now and then. They tend to work well for a while, but eventually, some indicators fail, while others do not at a given time. As more data comes in, the analysis will evolve to incorporate new moves, invalidate a previous hypothesis or gain evidence for a previous idea.

In this analysis, we looked at the BABA/M2 ratio. While this is helpful to understand how an individual stock performs against something else (here the total money supply, M2) and to see if the idiosyncratic risk is worth it, the interpretation of BABA/M2 allows for multiple scenarios to occur. Since M2 is moving too, it influences the final outcome of BABA itself and the path it takes.

For an approximately constant M2, BABA/M2 could go lower, because BABA is underperforming M2 (dropping). If BABA/M2 goes higher, then BABA is outperforming M2 by going higher more quickly and thus, a good selling opportunity might present itself in the future. Such relative comparisons are tricky at times, and it is important to keep in mind that its interpretation could be more ambiguous.