Disclaimer


The contents in this blog is solely for information purposes only. All expressed views and technical analysis in this blog do not constitute buy or sell recommendations. Readers should do their own research and due diligence as well as consult with an investment professional before making any investment decisions. The author will not be held liable nor accountable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.

Wednesday 22 October 2014

DSONIC

Periodically,  TCB will pick a stock we may like to trade short term.  So, this week, TCB have picked the stock, DSONIC to put in *Stock In Focus (SIF)*.  Please do not take this as a buy signal as our TA reading for these stocks are for sharing purposes only.  Do calculate your own risk/reward ratio if you decided to trade this counter.


For this edition of SIF, we have featured a stock linked to one of current stock themes in play, namely, the GST and Petrol Subsidy theme.  Although, presently, it may not be fully ready for a breakout from a TA perspective, we nevertheless opine that it is a stock worth watching out for.  As with all stocks, it does carry some trading risks.



-- Dsonic: Daily Chart --


Since hitting a high of 2.425 on 1/4/2014, Dsonic underwent a 2 weeks correction that took it all the way down to 1.295, a 50% retracement. It was traded up again to the high of 2.06 in June 2014 and subsequently churned out a double top formation which broke down in Sept. 2014.  The bearish formation sent its prices down when it achieved its break down target of about 1.44, approximately a 78.6% retracement, on 8/10 and potentially could be rebounding off this retracement level.  

-- Dsonic: Daily Chart --

On 21/10, it formed an engulfing bear during the downtrend which may have the implication of a last engulfing bottom. Currently, momentum on the stock is gaining as suggested by the up trending RSI while the trading pattern has a hint of an inverted head and shoulder formation in progress which has bullish implications if a break out occurs.  The stock has an immediate support at 1.56 which if broken will have further support back at 1.49 and 1.44 respectively.  For short term traders, a stop loss of 1.43 is recommended while for mid-term traders the recommended stop loss is 1.29.

In order for it to pursue a breakout, it first needs to take out its immediate resistance at 1.64.  Further resistance awaits it at 1.72 which if broken will see it testing the strong resistance of 1.82.  A successful break in 1.82 with volume will be a break out from the downtrend line and confirms the bullish trend reversal.  



Key Notes:
  1. Dsonic is heavily linked to the implementation of the petrol subsidy which represents a potential catalyst to the upward movement of the stock.








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