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BYD – An electric trap

The case for BYD (OTC PINK: $BYDDY) – the leading Chinese electric vehicles and renewable energy company – is very clear.

The share price is entrapped in a long term contracting triangle and it has been painfully climbing a wall of worries since it bottomed in mid-2011.

The 30-week moving average is trending upwards but the relative strength is still very week and there are no tangible signs of renewed interest in the stock from the time it abruptly collapsed at the end of 2010 unless all the volumes that developed below the USD15 level can be considered as massive and prolonged accumulation (possibly from the likes of Warren Buffet).

In order for the stock price to move higher it requires a decisive breakout above the USD15 level, preferably with significantly rising volumes and relative strength.

On the opposite a breakdown and close below the rising support line around 11.5 USD would be a very negative signal.

Disclosure: I am long #BYDDY since more than one year at an average price of S12.56, almost identical with yesterday’s closing price.

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