Diebold (DBD) is another potential reversal play right now. Shares of the $2 billion security and self-service kiosk maker have slid double digits in the last six months, making a reversal a welcome sight for long-suffering shareholders. Here's how to trade it.
Diebold's hasn't just been slipping lower. Instead, it's been moving lower in an orderly trend channel that's bounded by trend line resistance to the upside and trend line support below shares. That support and resistance level give us a good indication of this stock's likely moves within the channel -- and an indication of when this channel is broken. For the last couple of weeks, Diebold has been testing its trendline resistance level; a breakout above that upper bound for the channel means that the downtrend is over.
Momentum adds some extra confidence to this trade -- 14-day RSI has been trending higher since the end of October. Since momentum is a leading indicator of price, that's a very good sign for shares. Still, the downtrend isn't broken yet, and I wouldn't recommend buying DBD until it is.
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