On Sunday, 2/2/2020, the People’s Bank of China announced they would use reverse repurchase agreements to inject 1.2T yuan ($173B) into the economy to ensure ample liquidity is in the system. The net impact after accounting for maturing short-term funds is around 150B yuan according to calculations from Bloomberg. This sent BIDU higher in the U.S. session by 6%. Let’s see what the charts tell us.

Baidu (BIDU) Weekly Chart Grid – annotations by askSlim.com

At askSlim.com we use technical analysis to evaluate price charts of stocks, futures, and ETF’s. We use a combination of cycle, trend and momentum chart studies, on multiple timeframes, to present a “sum of the evidence” directional outlook in time and price.

 

askSlim.com Technical Briefing: The weekly cycle analysis suggests that BIDU is in an intermediate-term positive pattern and due for a short-term correction. Weekly momentum is negative.

On the upside, there is an intermediate-term Fibonacci projection/target zone from 161.70 166.35. On the downside, there is an intermediate-term Fibonacci support zone from 120.39114.01 followed by a lower Fibonacci support at 104.94. Our analysis suggests that for the bears to regain control of the intermediate-term, we would likely need to see a weekly close below 104.94.

 

askSlim.com Sum of the Evidence: BIDU has a positive intermediate-term cycle pattern with negative momentum. Given these conditions, we would expect any downside to be limited to the intermediate-term Fibonacci supports beginning at 120.39.

 

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