BIDU being s momo stock along with its longer term chart makes this an interesting stock and potentially an interesting trade shortly.
The longer term trend in BIDU has been a VERY obvious triangle, with as many momentum traders out there watching this one, the triangle was surely noted. A breakout above the triangle would bring buyer in to BIDU, even before that the fact BIDU had approximately 5 points of contact with the long term trend lines and the most recent failed to hit the lower trend line may have brought buyers in early before the breakout. However, these large triangles are almost always either tops or bottoms depending on where they occur after the preceding trend, in this case it would be assumed to be a top. The market wants to catch as many people as possible on the wrong side of the trade and thus technical analysis is often used against technicians and a breakout like this is not always what it appears to be. I'm watching AMZN for the $200 mark, a centennial mark that traders gravitate toward for s similar situation and potential trade set up.
Here's a longer term view, the preceding uptrend with the triangle forming after it would hint that this is a large top, the price pattern implied target would be a huge move in BIDU to the $80 area approximately.
The long term daily 3C chart shows a large round of accumulation in BIDU starting in 2008 and moving through the 2009 bottom, even stock accumulated early at the $22 area (adjusted for splits) would have seen a huge profit. The current 3C reading is leading negative. To confirm the dily 3C, I looked at Money Stream as well below.
Money Stream confirms the 3C daily chart above with trend confirmation in green and negative divergence in MS at the July Highs, since then MS is leading negative as well.
This hourly chart shows positive and negative divergences in BIDU and in the squares, the approximate areas of both, as you can see, even very early divergences whether positive or negative would have yielded nice gains on long/short trades. The current hourly is going negative at the breakout area.
The 30 min chart is a good example of a long term relative divergence as the yellow trend line points out two relative areas of the same price, yet 3C is lower at point B then point A, again I also marked the areas of accumulation and distribution. Being BIDU is a large , liquid stock, accumulation/distribution would obviously take longer to put on a significant size institutional position. Still, even at the highest point of where accumulation starts, the returns far surpass that level, the same applies for the distribution areas. More simply stated, even if you got in very early on a divergence (positive or negative) and saw better prices for either a long or short position develop after getting in early, you still would have made a hugh profit. This is often the case with large, liquid stocks like this.
Here's a more recent triangle within the larger triangle on a 15 minute chart, you can see 3C is leading negative here.
On a 5 min chart, the same
The shorter timeframes offer more detail, the positive divergence in the triangle sending BIDU higher is likely smart money and/or market makers aware of the larger order they may have filled trading their own accounts. Again, no confirmation on the breakout, which would suggest there is selling in to strength and the breakout would provide the sellers with plenty of buyers to sell larger chunks in to demand.
The 1 min chart shows a commonly seen head fake/,shakeout which was accumulated as some traders were likely stopped out o the break of the trend line, again no confirmation of the breakout, suggesting BIDU is seeing smart money sell i to strength.
The white boxes just touch on the concept I often talk about, 'Large volume within a downtrend often becoming a support level/reversals). The optimal trade would be a short on a head fake move (the breakout being the head fake move). The underlying technicals seem to suggest this is the case. A break back in to the triangle would put the breakout buyers at a loss, a move below the triangle would put many more traders at a loss, this is often why we see head fake moves before a reversal. The longs (or in the opposite case of a base) are at a loss as BIDU moves below their buy point, the breakout would be a significant buy point. This in turn causes them to sell increasing supply and sending prices lower a lot faster then prices rise, it's a snowball effect that takes advantage of technical traders indoctrination in the dogma of technical analysis.
An earlier entry point still above the triangle may be found on a break below the hourly trend channel. As I demonstrated on the longer term charts, even with a negative divergence BIDU can still move higher a the negative divergence is just showing us what institutional money is likely doing so I prefer to have some confirmation like a break below this channel which is a little more aggressive.
A break below the daily trend channel is a little more conservative, the probabilities are higher, but the risk is also a bit higher, for this reason I often prefer to phase in to trades like this.
We'll keep BIDU on the radar for a potential entry, but I would set some alerts, either price or perhaps trendline breaks.
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