Don't Ignore This Chart!

Baidu Goes for Breakout after Long Stall


Baidu ($BIDU) has basically gone nowhere since 2014, but the stock is showing signs of buying pressure recently with a wedge breakout. First, the weekly chart shows the stock surging some 200% and moving above 170 for the first time in late 2013. The stock peaked in late 2014 and then fell sharply in 2015. A triangle then formed over the last 9-12 months as the stock battled the 170 area (blue shading). The red zone marks long-term resistance. We will look at the daily chart after the jump. 

The next chart shows price action over the last seven months. BIDU surged and fell back with a falling wedge. Notice that the stock managed to firm around the 61.8% mark. There is nothing magical about this Fibonacci level, but it jibes with basic Dow Theory. How? A correction (secondary move) after an advance (primary move) is expected to retrace 1/3 to 2/3 of the prior move. BIDU clearly firmed in the 160 area and made a breakout bid with the surge over the last few weeks. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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