Trade Idea: $Alibaba(BABA)$ – Renko Signals Sustained Strength Ahead of Earnings (May 15th)

Alibaba (BABA) continues to carve out a strong structural uptrend, and the Renko chart is flashing renewed momentum just ahead of its next earnings report.

Fundamental Picture:

Alibaba has surged 50% so far this year, driven by renewed investor confidence and aggressive capital allocation into AI and cloud infrastructure. The company has committed over $50 billion to scaling its cloud and machine learning capabilities — a strategic pivot to compete more directly with U.S. tech majors.
Its last quarterly numbers showed strong traction: 8% revenue growth year-over-year and net income jumping by 25%, driven by cost discipline and improved performance across e-commerce and logistics. Yet, despite the rally, BABA still trades on a forward P/E below 9 — significantly discounted compared to its tech peers. That's a mismatch that hasn’t gone unnoticed.
Next earnings: May 15, 2025 (pre-market).

Technical Overview – Renko Chart (see attached)
On the Renko chart (block size $1) - looking to push back into the heavy volume price area of $130 to $145 with the POC at $139 after recovering from the highs ($148) sell off back down to just under $100. Might get stuck here for a while but if it can break the highs then upside targets of $165 to $185 very possible. Currently trading $127 area. Indicators - longer term trend and short term momentum remain bullish.

Trade Plan
Entry: on pull back and momentum reversal signal (stochastic) around key 0.618 Fibonacci area ($122) - if not time your way in using indicators.
Stop: Below $122 Renko structure low
Target 1: $140 – next major structural resistance
Target 2: $150 – potential post-earnings overshoot zone / psychological milestone
Risk:Reward: Approx. 1:2.5 on base setup

Trade Structures
Long straddle to just after earnings pricing in a +/- 9% price move taking you up to approx $139 / $140 area or down to $116 area.
Outright Long: Suitable for swing traders positioning for earnings follow-through.
Call Options:
Look at June or July $130 calls — giving time for the move to develop. Watch implied volatility — earnings premium may be elevated, so consider timing entry pre-breakout.
Bull Call Spread:
Structure: Buy $130 call / Sell $140 call (June expiry). Defined risk profile with reduced premium — solid asymmetric upside.
Cash-Secured Puts:
If waiting for a pullback, consider selling $120 puts into earnings. If assigned, you're long near recent structural support with premium in hand.

Big Picture
BABA is showing classic signs of structural reversal strength — not just on price, but on institutional flow and positioning. The Renko chart cuts through the noise and confirms the trend. With fundamentals now starting to support the technicals, this trade setup offers a clean, risk-defined opportunity into earnings season.

If you’d like to find out more about what I do, Renko charts etc then check these out:
📘 My new book available from my bookstore: Renko Chart Trading Revolution — the foundation behind this forecast : THE STOP HUNTER BOOKSTORE

🎥 YouTube: [@TheStopHunter] – THE STOP HUNTER

🌐 Website: [www.thestophunter.co.uk] – tools, training, and book releases

Good luck with the trading!

Stephen