BABA will dropHistorically BABA drops on average 7.57% when the VI reaches its current level. I have laid out 3 potential levels it could drop to. The first hurdle (which should easily be met) is 87.88 (pink dotted line). BABA has not been South of this mark since August. My three levels will certainly be in play once the stock drops past this level.
CONSERVATIVE PLAY:
The stock will drop and a nice solid psychological 85.00 is the position I am most comfortable playing.
AVERAGE DROP:
WIth the average drop of 7.57%, a solid 7% drop above the bottom trendlines is a safer play.
BOTTOM OF PSEUDO TRENDCHANNEL:
Although it is not the "official" bottom of the trendchannel, it has been a more common support line in the current trend. This position is just below the 80 mark which is more than a 10% drop from its current position. This is a riskier bet, but not impossible considering international instability and most stocks being significantly overpriced.
