The company that provides seaborne transportation of crude oil, refined petroleum, and other products in the international shipping markets, Diamond S Shipping (NYSE: DSSI) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: The stock’s daily chart shows that the stock had recently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. This is a possible bullish sign.
Daily Chart – DSSI
#2 Trading Above MAs: The stock is currently trading above both its short-term moving average of 50-day and the long-term moving average of 200-day SMA, which implies that the bulls are currently in control. This is a possible bullish sign.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish signal.
#4 Bullish ADX: The ADX line has currently moved up from below –DI and +DI lines. The +DI line and the ADX line are also currently above –DI line. This indicates possible bullishness.
#5 Bullish Stoch: The %K line (blue color) is above the %D (orange color) of the stochastic in the daily chart. This is a possible bullish sign.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of the prevailing downtrend and started a new uptrend. The downtrend line is marked in pink color in the weekly chart below. A breakout from a downtrend is a possible bullish sign.
Weekly Chart – DSSI
#7 Bullish MACD: The weekly chart also shows that the MACD line is above the MACD signal line, indicating possible bullishness.
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 ascending triangle pattern, at around $9.00. However, those with a higher risk appetite can purchase half the intended quantity of shares of DSSI above yesterday’s high, at around $10.40.
TP: Our target prices are $14 and $18 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $6.00 (for entry near $9.00) and $8.00 (for entry near $10.40). Note that this stop loss is on a closing basis.
Our target potential upside is 34% to 100% in the next 3-5 months.
- Entry at $9.00: For a risk of $3.00, the target rewards are $5.00 and $9.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry at $10.40: For a risk of $2.40, the target rewards are $3.60 and $7.60. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending triangle 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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