One of the things I fancy most about initiating BIDU longs at these prices is the longer term technical pattern on the chart. It seems every year there is a predominant trading pattern that most stock form based on the trend and conditions of the overall market. Over the last year, the falling wedge has been that pattern.
On the monthly chart above, prices have formed this technical pattern over the last 2 years. If you were to dial this pattern down to a daily chart, the multi-month base is starting to show momentum to the upside, which should signal an upcoming breakout.
As discussed in my trading room Monday afternoon, I mentioned that BIDU would be lower today, and to buy weakness near $90. I opted for 3 week expirys, OTM, looking for prices to hit $105 within that timeframe.
More importantly, the next time BIDU clears $100, the stock will resume its long term uptrend.
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