Baidu Shares Drop 4.12% As Bearish Signals Test Key Support At $135

Baidu (BIDU) closed its most recent trading session at $138.94, reflecting a decline of 4.12% amid increased selling pressure. This drop forms part of a larger corrective phase from recent highs near $146.50.
Candlestick Theory
The recent price action reveals significant patterns. The session ending 2025-10-07 formed a bearish engulfing candle, closing near its low after a prior day's gain. This engulfing pattern at elevated levels signals strong selling pressure and potential short-term reversal. Key support is now evident around the $135.35 level (2025-09-19 close and 50-day moving average proximity) and major support near $123.79 (the significant swing low from 2025-09-16). Resistance is firmly established at the recent peak of $146.50, coinciding with the psychological $150 barrier.
Moving Average Theory
Baidu's moving averages illustrate a volatile yet persistent uptrend now under pressure. The 50-day moving average (approximated near $132-$134) provided support during the early October advance but is currently being tested again. The 100-day moving average (approximated near $125-$127) acted as a strong foundation during the late September pullback. The long-term bullish trend remains intact, evidenced by the price holding well above the rising 200-day moving average (approximated near $100-$102). However, the close below the 50DMA on 2025-10-07 suggests potential weakening of the short-term uptrend, requiring confirmation.
MACD & KDJ Indicators
The MACD indicator likely generated a bearish signal recently, with the MACD line crossing below its signal line. This crossover aligns with the price retreat from the $146-$150 resistance zone, suggesting waning upward momentum. Concurrently, the KDJ indicator was likely approaching or entering overbought territory (K and D lines potentially above 80) near the $146 peak before starting to turn downwards. The recent decline suggests the KDJ could soon retreat from overbought levels, potentially entering neutral territory or signaling further downside momentum short-term.
Bollinger Bands
Bollinger Bands suggest heightened volatility recently. The strong surge to $146.50 saw price challenging the upper band, a typical characteristic of an overextended move. The subsequent sharp decline on 2025-10-07 caused the price to plunge towards the middle band (often aligned with the 20-day moving average, roughly approximating the 50DMA level here near $135). A band contraction phase preceded the mid-September rally, followed by expansion during the breakout and subsequent retreat. Current price proximity to the middle band suggests a critical test; holding near it could stabilize price, while breaking below could accelerate the sell-off towards the lower band.
Volume-Price Relationship
Volume patterns provide crucial context. The rally initiating on 2025-09-17 ($130.68 - $138, +11.34%) occurred on exceptionally high volume (19.89 million shares), indicating strong accumulation. Subsequent rallies towards the $146.50 peak saw healthy volume support. Conversely, the significant decline on 2025-10-07 (-4.12%) occurred on notably higher volume (4.03 million shares) compared to the preceding up day on 2025-10-06, confirming the bearish engulfing candle. This distribution suggests the pullback may have further room to run as sellers gained conviction. The earlier breakdown on 2025-09-23 (-8.09%) also occurred on very high volume (11.61 million shares), establishing the $125-$127 zone as a volume support area.
Relative Strength Index (RSI)
Calculating RSI over 14 periods, the indicator likely approached or briefly exceeded 70 during the push to $146.50, entering overbought territory. This warned of potential exhaustion ahead of the pullback. With the recent sharp decline, the RSI would have fallen significantly, potentially dropping below 50 into neutral territory. While not yet oversold (<30), the downward trajectory signifies building bearish momentum. Its current level near 45-50 offers limited immediate signal; further decline would be needed to approach oversold conditions that might suggest a rebound opportunity, though this is merely a warning signal requiring price confirmation.
Fibonacci Retracement
Applying Fibonacci retracement to the major swing low near $80.33 (2024-11-22) up to the recent peak of $146.50 (2025-10-06) reveals critical retracement levels. The 23.6% retracement sits near $134.46, an area tested as support on 2025-09-19. The more significant 38.2% retracement level is approximately $128.50. The 50% retracement near $113.41 aligns with the mid-September low and the 100DMA. The recent pullback found initial support near $138-$140 (just below the 23.6% level). Sustained trading below $134 (the recent test point) would open the door towards the more substantial $128-$129 support confluence (38.2% Fib + 100DMA + prior swing low/high cluster). This Fibonacci structure offers critical downside targets should the current correction deepen.
Confluence and Divergence
Significant confluence exists around the $134-$135 zone, where the 50-day moving average, the 23.6% Fibonacci retracement, and prior support/resistance levels cluster. The recent close near $138.94 positions Baidu just above this critical area. A confirmed breakdown here would signal heightened bearishness with targets near $128-$129 (38.2% Fib / 100DMA). The high-volume decline validating the bearish engulfing candle and the emerging MACD bearish crossover align negatively. A divergence emerged earlier near $146; price made a higher high while the MACD histogram and RSI may have shown lower highs (negative divergence), warning of the subsequent pullback. The current alignment of price action, volume, MACD, and key support/resistance levels suggests bearish pressure is dominant in the near term, requiring buyers to step in strongly around $135 to prevent a deeper correction. Probabilities currently favor testing the next major support zone unless the $135-$140 area is reclaimed convincingly.