Stock: Cabcharge Australia Ltd (CAB ASX)
Isaac Newton’s third law of motion states: ‘what goes up must come down’ – a phrase that has unfortunately rung too true for long-term holders of shares in Cabcharge Australia Ltd. Having run all the way up to test levels above $14.00 in September 2014, the share price has been on the slippery slide ever since, capitulating to test all-time lows at $1.62. When taking a longer-term look at the monthly chart below, we can see two significant areas of price congestion that can now be considered major resistance zones. The higher of the two zones is formed between $6.84 & $6.05, and the lower of the two zones between $4.30 & $3.60. When we apply the microscope to come in for a closer look at the weekly chart, a near-term resistance zone becomes evident between $2.90 & $2.58. The formation of a double bottom at the all-time low at $1.62 could be a sign that price has exhausted itself to the downside for now and be priming for a short-term bounce back up into the overhead resistance zones.
What Does Cabcharge Australia Do?
Cabcharge Australia Ltd is the Taxi payment processing provider, who along with the Taxi industry as a whole, finds itself firmly on the ropes after the arrival of global giant Uber into the Australian transport scene. Having enjoyed years of monopoly-like operating conditions, Cabcharge let slip the opportunity to be the first-mover in the ‘payment via mobile phone app’ race, which it now finds itself scrambling to implement years after this method of payment has already been widely adopted.
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The Baron’s Brief – Official Summary
When the complacency bug bites, it tends to bite hard. Think of Kodak who squandered the opportunity with the digital camera or Nokia who went from mobile phone market leader to market nobody in a few short years. Whilst the diagnosis for Cabcharge may not be terminal, the company is certainly on the back foot and scrambling to reinvent itself. Any bounce off the lows and retest of the overhead resistance levels would see the Baron become a happy Short Seller of Cabcharge shares with the view to rejoining the overwhelming prevailing downtrend.
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Disclaimer: The information contained in this article has been prepared solely for the entertainment & educational purposes of the reader and does NOT constitute financial or investment advice. Any examples presented in this article are for illustration purposes only. No person, persons or organisation are authorised or permitted by the authors to take any action on the reliance of this information without first consulting an authorised, accredited financial planner or advisor. The authors are entitled, at their sole discretion, to hold positions in the above-mentioned stock/s. The authors accept no responsibility for the accuracy, completeness or timeliness of the information contained in this article. Disclosure – No positions are currently held in CAB – ASX at the time of publishing this article (This is a disclosure and NOT A RECOMMENDATION).