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Is Dixons Carphone poised for breakout? (DC)

27 Feb 2018 | by: Patricia Miller

On a fundamental level, I have believed Dixons Carphone (LSE:DC) to be undervalued ever since I covered the company back in September at £1.68. In December, the Interim Results shone a further positive light on the business as far as I was concerned; my conclusion being the over-50% drop in the share price was overdone. Since then, the share price rose to over £2 but the Relative Strength Index (RSI) indicated it was heavily overbought. This month, the share price has been consolidating in a range between £1.90 and £2 and over that period the RSI has cooled off, currently sitting at around 50. Encouragingly, the RSI is showing signs of a continuing uptrend and today saw a strong bounce off £1.90 support as well as a respect for the RSI support line. Other positive signals are the recent crossing of the 50 DMA above the 100 DMA. This may well be followed by its more infamous sibling, the Golden Cross (50 over 200 DMA). Also, a Symmetrical Triangle pattern has been developing over the past six weeks ensuring a decision about price direction will come soon enough. Generally, this pattern indicates a continuation of a trend, which would be positive in this case. The gap down in August last year from £2.35 might be a good initial target as trading folklore does suggest gaps in price action almost always get filled!

Author: Stuart Langelaan

The author of this piece owns shares in the company written about above, Digitonic Ltd (and our owners, directors, officers, managers, employees, affiliates, agents and assigns) are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above.

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

  • Patricia Miller does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.
  • Patricia Miller has not been paid to produce this piece by the company or companies mentioned above.

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