BIDU: Ye Olde Knuckle-biter

From yesterday morning:

"If BIDU had bounced off the 123.00 low and CLOSED back above the top trendline of the Channel, it would have looked alright, but the CLOSE back inside of it presented The Bulls with the dreaded "Ye Olde Knuckle-biter" going home."

I didn't have any appetite yesterday morning for joining the BIDU Bulls in a knuckle chew on the opening Smackdown, in sympathy with GOOG's earnings miss, but I did begin to lick my chops when I saw:

1. The rally back to Unchanged
2. The successful retest of the opening low
3. The move to a new high of 124.54, which also was back above the 124.227 top trendline of the Channel in the daily chart, and
4. This breakout of a Falling Wedge

Although The Bulls still were involved in "Ye Olde Knuckle-biter," below 124.227, I liked that they were showing this kind of gumption here in the early going. I bought 2,000 BIDU at 123.24 and promptly stuck my knuckles in my mouth to show that I was sincere about aupporting The Bulls in their plight ;)



After I entered long (white arrow), The BIDU Bulls formed two Right Shoulders for a DOUBLE Bullish Inverse H&S pattern. Quite lovely. As we know, these multiple patterns/nested patterns can pack some punch on a breakout, which in this case, would put the early session high of 124.54 and a bit beyond that IN PLAY.



The Bulls broke out of the DOUBLE Inverse H&S and ran to 124.00, which was very nice.

What potentially WASN'T nice is that the two pullbacks from 124.00ish were rather deep, and a possible Bear Flag had emerged (pattern in white). Especially since The Bulls still were below the 124.227 Channel basis the daily chart, I didn't want to see any weak-kneed Bulls here, allowing The Bears to break this flag to the downside. That would suggest at least a retest of the DOUBLE Inverse H&S neckline, in which case I wasn't at all interested. I wanted to see some of those upside screamer bars showing up, like on the early rally to the the early high.

I decided to sell if the 123.60 low at White Data Point #4 got taken down.



UGH. The Bulls allowed The Bears to morph the Bear Flag into a H&S Top, then break it to the downside. No-o, thank you, and lemme outta here! I threw in my 2,000 shares at 123.58.



It's a good job of it that I did...YEESH. The Bears scored on every pattern that The Bulls tried to establish after The Bear Flag/H&S Top breakdown (white arrow), until The Bulls finally were able to break out of an Ascending Triangle (in purple), which was very sloppy. After the upside breakout, the Bears were able to move the stock back below the flat top of the pattern, willy nilly.

The horizontal red line (123.05) is the low of the Right Shoulder of the DOUBLE Inverse H&S. That support "shouldn't have" gotten taken out to the downside. It became resistance going into the final gong.

As bad as the afternoon was for The Bulls, they've still got a chance of coming out of "Ye Olde Knuckle-biter" alright.




While we never like to see a close back below a breakout (or above a breakdown, if it's bearish), it can end up being a bit of a Grande Deception that catches players off guard.

Look at the false upside breakout of the Symmetrical Triangle back on November 15. The Channel (in black) had broken down, but the Bulls formed and broke out of the Symmetrical Triangle (in blue) and it "looked like" they were headed for at least a retest of the recent high. Nope. The Bears reversed the breakout, back inside the Symmetrical Triangle, then...Whack!

In the current time-frame, although Friday's session is the second CLOSE of "Ye Olde Knuckle-biter, back below The Channel breakout, the candle is a "possible" Bullish Doji Star Hammer which also is sitting right at the bottom of Kumo (Cloud) support.

The first order of business for The Bulls on Monday, January 23, is to: (1) get back above 123.02-123.05 resistance, (2)then the top of the Channel, which will come in at 123.808 and, (3) then knock out Friday's high of 124.54, which would trigger a repeat Buy Signal from the 13/21RSIs and the 21/34RSIs.



Friday's close puts both the 13/21RSI and the 21/34RSI pairings at Bullish Synchronicity (readings that are in close proximity). I use a penny above that session high as the "buy signal" (the stock also must close higher), but this is only one indicator and always remember that indicators only "indicate." These indicators only are indicating that they're good to go, like we saw last week in AMZN when we got a repeat buy signal in the RSIs. AMZN took off to the upside after it knocked out 184.65-184.80 resistance. It's up to the analyst to have a peep at the chart and decide whether or not the chart looks good enough to take action based on any given signal.



Gain: $650