Baidu Inc. (NASDAQ: BIDU) Stocks lost ground Thursday amid tensions between China and major Western countries over human rights concerns. Could this be weighing on the market?
Baidu shares ended the session at $ 204.57, down 14.47%.
Baidu Daily Chart Analysis: The stock appears to be forming what technical traders may call a “head and shoulders” pattern.
A head and shoulders pattern is considered a bearish reversal pattern, although it may not act that way.
The pattern occurs when the stock rises and reaches a high, consolidates and continues to make a new high, falls and bounces close to support before climbing towards the initial high and finally sells below initial support.
The stock has previously shown support near the $ 220 level, which has struggled to cross below. This is a key area on the chart, possibly confirming the head and shoulders pattern.
Although the stock may be forming a head and shoulders pattern, it is trading above the 200-day moving average (blue), indicating that the stock’s sentiment still hints that it is bullish.
This is a potential area where the stock can find support in the future.
The bulls would like to see the stock break above the potential resistance line that the pattern generates. This could invalidate the pattern and cause the stock to start moving up above support.
The bears would like to see the stock close below the $ 220 level and have a period of consolidation. This can cause the stock to move stronger to the bearish side. This move can cause the price to drop to near the 200-day moving average before it can find support again.
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