Looking at the short-term technical picture of Baidu Inc stock (NASDAQ: BIDU), it seems to be forming an ascending triangle, which is clearly visible on the 4-hour chart. According to TA textbooks, such patterns tend to break to the upside. But as history has shown, it doesn’t always work out that way. From around mid-August, the price continues to form higher lows, but is still struggling to move above its key resistance, at 113.25. If, eventually, that barrier fails to withstand the bull-pressure and allows BIDU to climb above it, this is when we will start examining slightly higher areas. But until then, we will take a cautiously-bullish approach.
As mentioned above, if we see a clear push through the 113.25 barrier, marked near the highs of July 31st, August 20th and September 11th, this might attract more buyers into the game, as this would mean that the ascending triangle has been broken. This is when we will target the 116.75 hurdle, which marks the highs of July 10th and 24th. If that hurdle is just seen as a temporary obstacle on the way of the bulls, the next potential target could become the 200 EMA, or the 120.90 level, marked near the highs of June 20th and July 1st.
Our oscillators, the RSI and the MACD, are giving us mixed signals. The RSI, after topping in the first half of September, moved slightly lower. That said, the indicator is still above 50 and points slightly to the upside. The MACD continues to run above zero, but recently shifted a bit below its trigger line. It seems that neither of our short-term momentum studies clearly support any of the directions, enhancing our choice to stay a bit cautious.
On the other hand, if the aforementioned upside line breaks and the share price falls below the 106.90 zone, marked by the inside swing high of August 29th, such a move could interest more sellers to join in. The stock might then drift to the 102.00 hurdle, a break of which could clear the path for further declines. BIDU may then slide all the way to the 97.40 level, marked by the high of August 16th.
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