BIDU Trade Idea and Position Management Follow Up

BIDU, a long time favorite is a partial (intentional) core short position (trend trade), 1/3 size was entered, it's close to break-even, but I wanted to wait for a broader market move because of all the shorts lining up that needed that extra bump to the upside.

BIDU was recently brought out again as a trade set up, a trade that comes to us on our terms with excellent risk/reward properties, this is that post from last Friday which covers some of the larger history of BIDU and what we expected from there.

The very next trading day, this Monday, BIDU does exactly what we were looking for, here's yesterday's update dealing more specifically with the details of the trade idea and add-to.

Here are today's charts thus far as BIDU continues to behave as we'd expect, now it's all about timing to start or add to the partial position, I will be looking at bringing it to full size so that means adding the additional 2/3rds of a full position size.

 We were looking for a breakout/ False breakout (head fake) move from the "Bullish" Ascending triangle which is not there by coincidence as any first month technical trader would recognize the price pattern and what it implies.

This is why we were looking for the breakout that came the very next trading day, today it continues.

As I said Friday, it has to be convincing, just a move above resistance that triggers limit orders rarely does it, but they also tend to be in scale or proportional.

 The 30 min chart and many others were already leading negative before the breakout meaning the probabilities are/were VERY high that any breakout would be a failed (Bull trap) move, if I could only look at 3C once that last Friday and see this chart, I'd assign about a 95% chance that the breakout would be failed and I'd just be looking for the pivot to the reversal. The downside momentum starts when the triangle's former resistance (now support) is broken on the downside, the next momentum stage is just below under the triangle, so BIDU could fall very fast initially.

The yellow numbers are the stages, I didn't even have to draw the 3C divergences because they are that clear as the stages are: 1) base, 2) Mark-up, 3) top/distribution and "HF" the Head Fake move seen just before a major reversal and transition to stage 4 decline.

 The 10 min chart and some gas in the tank to the left to drive the move, but what is important is the leading negative divegrence at the breakout area.

Here we see it on a 5 min chart as well. From here I'm looking for more extreme signals.

The 5 min chart also clearly shows the management of BIDU with small demand9accumulation) and supply(distribution) that was used judiciously to create an ascending triangle, as I said Friday, "This triangle is not here by coincidence".

 So far intraday charts like 3 min look great, these are the ones that will migrate to longer charts and cause more severe signals and damage.

 This is the accumulation on a 1 min chart (small) just before yesterday's breakout and distribution in to the breakout immediately which is getting worse, PERFECT thus far, the trade is coming to us just as we planned.

You can see the 1 min is migrating to the 2 min.

When the signals are screaming it's time to move, more or less though that's myopic in looking for the best and most timely entry, truth be told, I don't think it will amount to more than a couple percent advantage which is not that much considering the big picture, what would be a shame is to miss the trade.