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$Alibaba(BABA)$ $GRANITESHARES 2X LONG BABA DAILY ETF(BABX)$ 🅱️ U͎ L͎ L͎ I͎ S͎ H͎

🚀🇨🇳💹 $BABA: The Cartography of Chaos, Mapping the Drop Before the April Ascent 📉💹🚀

🧠 $BABA: A Guide to Volatility, Navigating the Path to April 2025 🧠💹🇨🇳

Alibaba ($BABA) stands at a critical inflection point, presenting a high-probability setup for global traders with the foresight to chart its trajectory. The daily chart unveils a complex geometric pattern labelled “Scale 2,” which, when synthesised with options flow data, reveals a calculated “drop before the ascent” trajectory into April 2025. At a current price of $136.85 as of 21March25, 🇳🇿NZ Time, $BABA is poised for a strategic retracement followed by a potential breakout 🗓️📈💹

Let’s map this terrain with precision, integrating pattern trading principles, institutional behaviour, volume dynamics, and Alibaba’s evolving position in the global market to forecast the next move.

🌍 Alibaba in Context: A Colossus Reborn Amidst Shifting Sands

Alibaba Group Holding Limited ($BABA) is a linchpin of the global tech ecosystem, a titan that transcends simplistic comparisons to Western counterparts. Founded in 1999 by Jack Ma, Alibaba has grown into a conglomerate spanning e-commerce (Taobao, Tmall), cloud computing (Alibaba Cloud), digital payments (Alipay via Ant Group), and logistics (Cainiao).

As of March 2025, Alibaba commands over 50% of China’s e-commerce market, facilitating $1.3 trillion in gross merchandise volume (GMV) in the fiscal year ending March 2024. Alibaba Cloud holds a 9% share of the $300 billion global cloud market, trailing only AWS and Microsoft Azure, with projected growth of 20% annually through 2027.

Alibaba’s journey has been marked by triumph and turbulence:

⚡ Regulatory Thaw – Recent reports from Bloomberg and Reuters indicate a softer stance from China’s regulators, with a $140 billion liquidity injection announced by the People’s Bank of China in Jan25 to bolster tech innovation.

⚡ Restructuring Efforts – Alibaba plans to spin off its cloud and logistics units, with the cloud IPO slated for late 2025, potentially valuing it at $60 billion.

⚡ Growth Drivers – Alibaba Cloud reported 12% YoY revenue growth in Q4 2024, while Tmall saw a 10% increase in GMV during Singles’ Day. Ant Group’s IPO may also return in 2026 per reports from the South China Morning Post.

At $136.85, $BABA trades at a forward P/E of 10.5, a stark discount to peers like Amazon (P/E ~40) and Tencent (P/E ~20). This valuation gap, combined with growth prospects, positions $BABA as an undervalued asset with substantial upside.

📢 Analysts Are Bullish

✅ Morgan Stanley (March 2025) – Raised price target to $180, citing “improving regulatory clarity and strong cloud growth.”

✅ JPMorgan (Feb 2025) – Maintains Overweight with a $165 target, highlighting Alibaba’s resilience and potential for margin expansion.

✅ Goldman Sachs (Jan 2025) – Upgraded to Buy with a $170 target, calling $BABA a “top pick in the Chinese tech sector.”

📈 Pattern Trading Framework: Decoding “Scale 2”

The “Scale 2” pattern is a geometric construct of intersecting trendlines, forming a labyrinth of converging and diverging channels. Here’s what it reveals:

⚡ Resistance at $138.40 – The price recently rejected this key level, aligning with Fibonacci resistance and options data.

⚡ Support at $130 to $134 – A high-liquidity zone where large institutional orders are clustered.

⚡ Volume Profile – The high-volume $130 to $134 zone suggests a pullback here would likely be met with strong institutional accumulation.

📊 Options Flow: Institutional Intentions Unveiled

💰 Net Flow – Calls at $55.34M vs. puts at $80.80M, suggesting institutions may be hedging a temporary drop rather than positioning for sustained downside.

💰 Unusual Call Activity – $3M in unusual call buying around $140-$145 strikes, indicating smart money anticipating a breakout.

📉 The Drop: A Calculated Descent to $130-$134

📌 Market Structure & Liquidity Dynamics

   •   A mean-reversion move suggests a pullback to $130-$134 in late March before reversing.

   •   Regulatory news, a stronger US dollar, or market-wide corrections could accelerate this drop.

📌 Target & Confirmation

   •   Key Support: $130-$134

   •   Bearish confirmation: Breakdown below $134 with increased put activity

   •   Bullish invalidation: A failed breakdown below $134, followed by call buying resurgence

🚀 The Ascent: Breakout Into April 2025

Once the drop to $130-$134 is complete, the stage is set for a breakout towards $143-$147.90 by April.

📌 Pattern Resolution

✅ The symmetrical triangle suggests an upside breakout, with a measured move target at $143-$147.90.

✅ A break above $138.40 on high volume would confirm the next leg higher.

📌 Options Flow Support

✅ Institutions are aggressively buying calls, reinforcing the bullish outlook.

✅ A short squeeze could accelerate gains as price breaks resistance.

📌 Timing & Catalysts

✅ Earnings, regulatory clarity, or a Chinese tech rally could propel $BABA higher in April.

🧩 Market Psychology & Institutional Behaviour

The “drop before the ascent” is a textbook example of how institutions manipulate market psychology:

📉 The Drop: Weak hands get shaken out at $130-$134, creating a liquidity vacuum.

📈 The Ascent: Institutions step in, sending price surging past $138.40, trapping shorts.

🌍 Macro & Fundamental Overlay

📌 Rate Cuts & Liquidity: The Fed’s expected Q2 2025 rate cut and China’s liquidity injections are bullish tailwinds.

📌 Alibaba’s Fundamentals:

✅ Cloud division projected to grow 20% annually through 2027

✅ E-commerce remains resilient, commanding 50% market share in China

✅ Forward P/E of 10.5 vs. historical average of 20, implying a potential price target of $270

🎯 Strategic Playbook: How to Trade This Setup

📉 For the Drop (Late March - Early April)

📌 Short/Puts if $134 breaks, targeting $130, stop-loss above $135

📌 Bearish confirmation: Increased put premium & high-volume breakdown

🚀 For the Ascent (April 2025)

📌 Buy on bounce off $130-$134 or breakout above $138.40 with high volume

📌 Target: $143, stretch target $147.90

📌 Confirmation: Call premium surge, volume spike, successful retest of $138.40

📊 Options Strategy

✅ Consider April/May 2025 calls at $140 or $145 to capture the breakout while managing downside risk.

📢 Conclusion 

$BABA’s “Scale 2” pattern, combined with options flow data, signals a high-probability “drop before the ascent” setup into April 2025. The retracement to $130-$134 will likely be the final shakeout before a breakout to $143-$147.90. Traders should stay disciplined, map key levels, and position accordingly to capitalise on this rare market moment.

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Happy trading ahead! Cheers, BC 📈🚀🍀🍀🍀

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