Hi everyone! Today I’ll look at one of the AI darlings of 2024:
SoundHound AI, Inc. (NASDAQ: SOUN)
From the weekly chart alone, SOUN is trading in a rounding bottom pattern with a key pivot at 14.08. Over the past few months, it has been making a consistent series of higher highs and higher lows. Significant volume spikes have been noted on green candles, suggesting bulls are firmly in control
On the daily chart, we can see SOUN trading in a near-term ascending channel with higher highs and higher lows. I note that the stock has formed a bearish divergence on RSI, which has seen a move back to the support trendline. Interestingly enough, the stock appears to be putting in a third leg of hidden bullish divergence in the meantime. Divergence alone does not confirm anything, so we need to look at levels and other factors. For one, I note that 5.84 was prior support when the stock first IPO’ed via SPAC reverse merger. SOUN has also retraced 50% of its overall move from 1.62 (swing low) to 10.25 (swing high). A combination of factors suggests that SOUN has found a local bottom and is likely to continue higher from here.
However, if SOUN were to break down from this channel, then the next spot to look at would be 4.95. This was previously a sticky resistance level in 2022 and 2023, before it was flipped into support earlier this year. A breakdown here could precede a retest of 3.47, and possibly lower to fill the 2.42 bullish gap up from last month.
So, why is 11.73 my swing target? Because there’s a low-volume imbalance that formed there previously that we’ll probably fill over the next few weeks.
Capybara Research’s report probably played into the chart’s price action for the stock to go back into support. They are short shares at the moment, but they’ll probably regret their decision in a few months. As sentiment turns into fear, the risk-to-reward favours bulls. Nvidia’s disclosure of a stake in the company should continue to assuage investors for the time being.
Sentiment: BUY
Summary (with Price Targets - NFA):
Longer-term cup and handle with a measured move to 14.08 (key pivot level) and a shorter-term ascending channel with a measured move to 11.73 (prior imbalance).
Investors can accumulate at current levels down to 5.84. If we lose this level then there’s risk for the short-term, as the price will retreat back to support at 4.95 (S/R flip level, previously major resistance for 2022 and 2023).
Short report might be something weighing on the minds of investors, and rightfully so. Potential future tailwinds would be (non-exhaustive) in terms of partnerships, Nvidia increasing their stake, or reduction of debt.
Alright, that’s it for this newsletter. Till the next one!
@TigerWire @TigerStars @TigerEvents @CaptainTiger @MillionaireTiger
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