Baidu Remains Tempting

 | Jul 14, 2014 | 9:10 AM EDT
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Baidu (BIDU) share have continued to rally from key weekly-chart support from April, as illustrated below.

Baidu (BIDU) -- Weekly
Source: Dynamic Trader

A confluence of multiple Fibonacci price relationships came together at that low, and the low was made on April 7 -- a day off the time window that called for a reversal, per the daily chart. Since Baidu has not met the initial upside target for a move off the $140 area just yet, I'm still interested in this one on the buy side. As we can see, on the weekly chart target 1 is $202.58. Target 2 is $219.42.

Baidu (BIDU) -- Daily
Source: Dynamic Trader

Now let's take it down to the current daily chart, which can give us useful trading and risk parameters. Note that the stock just underwent a nice pullback within that healthy larger uptrend. Currently, the price is above both the 200- and 50-day simple moving averages, and its five-day exponential moving average is above the 13-day EMA -- all of which indicates the bulls are in control at the moment.

Baidu (BIDU) -- Daily (With Timing)
Source: Dynamic Trader

The stock hit a low last Thursday, and I believe that might be a tradable level. After all, the low came made at the coincidence of three Fibonacci price retracements, along with a cluster of Fibonacci time-based cycles that came due between July 8 and July 11. Furthermore, we have since seen buy triggers that suggest it's worth placing a bet on the buy side.

Now, if by chance this recent low is taken out, I'll still interested in one other standout area of support: between $170.97 and $174.69. This zone, which is a bit further down, includes a couple of key symmetry projections (i.e., measured moves), along with a 0.618 retracement of a prior major swing.

Bottom line: I'm still looking for some higher prices in Baidu, and the $198.57 area will be my initial upside target if the July 10 low remains intact. Alternatively, if the $170.97 area is taken out, I will back off the buy side until further notice.

Please refer here for more information on trade triggers.

See here for general guidance on Fibonacci trade setups.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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