There are several phases of price development on the BABA chart. The yearlong downtrend (November 2014 – September 2015) was followed by the 10 month consolidation till August 2016. The 84 – 86 area, where a record number of shares changed hands, served as resistance during the consolidation process. The breakout in August 2016 above this area was supported by the strongest cumulative buying pressure (chart below). In November – December price successfully tested the former resistance (now support) and bounced back above the declining Raff regression channel.
The intermediate-term P&F chart (volatility adjusted) shows that selling pressure (red arrows) was much higher on the second test of the support area. In spite of that, the price decline was unimpressive, supply was bought. The following advance on significant buying pressure confirms the presence of buyers. It’s possible that BABA entered a new period of consolidation since October. Whether it is a re-accumulation or distribution remains to be seen. However, it seems that the market participants have taken long positions ahead of earnings. The positive reaction on the earnings can lead to the test of the September highs.