The owners and operators of crude and product tankers, which provide seaborne transportation of crude oil, refined petroleum, and other products in international shipping markets, Diamond S Shipping Inc. (NYSE: DSSI) seem to be getting ready for a price surge according to its latest charts.
Bullish Indications
#1 Double Bottom Breakout: The stock’s daily chart shows that it has currently broken out of a double bottom pattern. The double bottom pattern is marked in pink color. A double bottom pattern is a strong bullish pattern and a breakout from it indicates a possible upmove in the short term.
Daily Chart – DSSI
#2 Price above MAs: The daily chart shows that the stock is trading above its short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA. This implies that the bulls are currently in control.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the daily chart.
This usually indicates bullishness.
#5 Bullish ADX: The ADX line is currently moving up from below –DI and +DI lines.
The +DI and ADX lines are also currently above –DI line. This indicates possible bullishness.
#6 Downtrend Broken: As you can see from the weekly chart, the stock had recently broken out of a downtrend. The downtrend line has been marked as an orange line. After the breakout, the stock has now started moving higher. This shows that the downtrend is now over and the trend has reversed.
Weekly Chart – DSSI
#7 Bullish RSI: The weekly chart shows that the RSI is currently above 50 and moving higher, which is a possible bullish sign.
#8 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, which is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for DSSI is if it corrects to the breakout level of the double bottom pattern at around $12. However, for those with a higher risk appetite, you can purchase half the intended quantity of shares of DSSI if it trades above $13.90.
TP: Our target prices are $15 and $18 in the next 2-6 months.
SL: To limit risk, place a stop loss at $10.40 (for entry near $12) and $12.10 (for entry near $13.90). Note that this stop loss is on a closing basis.
The target potential upside for this trade is nearly 25% to 60% in the next 2-6 months.
- Entry near $12: For a risk of $1.60, the target rewards are $3.00 and $6.00. This is a nearly 1:2 and 1:4 risk-reward trade.
- Entry near $13.90: For a risk of $1.80, the second target reward is $4.10. This is a 1:2 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the double bottom pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in its sector.
Happy Trading!
Tara
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