Since falling to an intra-day low of $1.82 on 28th Oct 08, ST Engg's trend is doing an ascending triangle formation with the resistance at $2.58; which it tried to breakout from on several occasions. The DI pair is positively spaced and an interesting feature is that ADX signal is showing sign of moving up beyond the 20 level. With DI positive spaced and if ADX could move up towards 40 level, this could potentially be a powerful breakout from $2.58 with an immediate target of $2.80 and then $2.94 and lastly the $3.00 pyschological level. MACD signals are in convergence mode sitting in the positive region which is a good sign indicating short-term downside could be limited. MACD histogram still healthly in the positive region also. RSI and Stochastic signals are showing a pulling back in short-term and if the ascending triangle formation is able to maintain, the pull back could retract to $2.40 level. This $2.40 is the breakdown level as it will invalidate the ascending triangle formation.
With reference to 9th Jan 09 closing price of $2.51, the rewards/risk ratio with an upside of $2.80 and a downside of $2.40 would be
($2.80 - $2.51) / ( $2.51 - $2.40)
= 2.64
