Baidu Slides 0.10% To 86.35 As Bearish Indicators Dominate Below Key 88.50 Resistance

Opening Context
Baidu (BIDU) declined 0.10% in the most recent session, closing at $86.35 after trading between $86.01 and $86.89 on reduced volume. This muted movement caps a year marked by significant volatility, with prices ranging from multi-month lows near $77 to peaks exceeding $116.
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Candlestick Theory
Recent sessions show consolidation between $86.01–$87.20, forming a bearish pennant after the steep 20% drop from May’s $95+ high. Key resistance is established at $88.50 (June 26 high and May 31 breakdown point), where repeated rejections signal persistent selling pressure. Support lies at $84.80 (June 23 low), a level validated by three successful tests. A sustained close below $84.80 may trigger accelerated selling, while a breach of $88.50 could signal short-term recovery.
Moving Average Theory
The 50-day MA ($87.82) crossed below both the 100-day ($89.35) and 200-day ($91.22) MAs in early May, confirming a bearish long-term structure. Price remains suppressed under all three MAs, with the 50-day acting as dynamic resistance. The descending 200-day MA underscores entrenched bearish sentiment. Until the price reclaims the 50-day MA, the trend favors downside continuation.
MACD & KDJ Indicators
MACD (12,26,9) shows a bearish histogram (-0.35) and signal-line cross below zero, reflecting waning momentum. KDJ registers K-line (45) and D-line (50) in neutral territory but lacks bullish crossover conviction. Divergence emerged in June: prices made lower highs while KDJ’s oscillators formed higher highs, suggesting weakening downside momentum. However, no oversold KDJ crossover exists to confirm reversal potential.
Bollinger Bands
Bands narrowed to a 5-week low (width: $2.15), indicating reduced volatility and potential breakout imminence. Price currently hugs the lower band ($85.80), a sign of persistent selling pressure. Band contraction coinciding with range-bound action near multi-month lows raises the probability of a downside resolution. A close below $85.80 could trigger volatility expansion targeting $82.
Volume-Price Relationship
Distribution is evident: May’s 19% plunge occurred on 2–3× average volume, confirming institutional selling. Recent rallies (e.g., June 24: +2.91%) saw below-average volume, invalidating recovery attempts. The July 3 decline occurred on light volume, suggesting capitulation is incomplete. For any reversal to be credible, it must coincide with volume exceeding the 20-day average of ~2.5M shares.
Relative Strength Index (RSI)
The 14-day RSI (48) sits neutrally but has consistently failed to breach 60 since May, indicating muted bullish momentum. While not oversold, the RSI’s repeated rejection near 55-60 during recovery attempts aligns with the broader downtrend. RSI divergence remains absent, reinforcing bearish bias. Note that RSI neutrality alone doesn’t preclude further downside.
Fibonacci Retracement
Applying Fib levels to the March–June decline (high: $105.80; low: $81.90):
- 61.8% level ($96.20): Absolute resistance; coincides with the 200-day MA.
- 50% level ($93.85): Aligns with June swing highs; reinforced by volume congestion.
- 38.2% level ($91.50): Converges with 100-day MA and July 1 intraday peak.
The 23.6% level ($86.35) served as temporary support but is now breached. Next key Fib support is the 0% level ($81.90).
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Confluence & Divergence Highlights
- Strongest Confluence: Resistance at $88.50–$89.00 combines multiple indicators:
- June 26 candlestick high
- Descending 50-day MA
- 38.2% Fibonacci retracement
- Volume shelf from May–June distributions.
- Critical Divergence: KDJ’s positive momentum divergence (higher lows in June vs. lower price lows) lacks confirmation from MACD or volume. This may indicate fleeting bear exhaustion, not reversal.
- Probabilistic Outlook: Bearish below $88.50. A break below $84.80 likely targets $82.00, while a volume-backed close above $89.00 could extend recovery to $91.50. High volatility breakouts appear probable given Bollinger compression.
Volume remains the key arbiter—sustainable reversals require accumulation signals absent in recent price action.