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.