Sony stock analysis: Will the uptrend continue?

The charts suggest Sony could resume its uptrend

A Sony Aibo robot dog raising its paw to give a high five in a Sony showroom                                 
Sony is in talks with Taiwan Semiconductor Manufacturing Company to manufacture chips in Japan – Photo: Shutterstock

Sony reported an operating income of JPY318.5bn ($2.7bn) in the July to September quarter surpassing consensus analyst estimates of JPY222bn, polled by Refinitiv, according to Reuters

Quarterly sales rose to JPY2.37trn from JPY2.10trn in the comparable quarter of the previous year. The company said that an improved mix of TV, audio and video products, and digital cameras helped it report a strong quarter.

The Tokyo-based electronics giant said it sold 13.4 million units of the PlayStation 5 (PS5) since its launch in November of last year. Chief financial officer, director and vice president Hiroki Totoki projected sales of 14.8 million PS5 consoles this financial year. To ensure a steady supply of chips, Sony is in talks with Taiwan Semiconductor Manufacturing Company to manufacture the chips in Japan.

Ace Research Institute analyst Hideki Yasuda told Bloomberg reported “Sales of PlayStation 5 so far this fiscal year are behind analyst expectations due to chip shortages. Despite strong demand for the console, Sony won’t be able to raise its 14.8 million unit sales goal for this [financial year]. That’s the maximum Sony would be able to sell.” 

According to Yahoo Finance, the consensus analyst share price target for Sony is $143.30. Will Sony’s stock go up and reach its target objective? What do the charts suggest? Read our Sony stock analysis to find out. 

Sony share price technical analysis: weekly chart

Sony weekly chart
Sony weekly chart – Credit:

Sony’s stock price recovered sharply from its March 2020 low of $50.83 to hit $118.02 in the first week of February this year. This level attracted profit-booking but the bulls did not allow the price to sustain below the 50-week simple moving average.

Both moving averages are sloping up and the relative strength index (RSI) is in the positive territory, indicating advantage to buyers.

The price action of the past few weeks has formed a rounding bottom pattern, which will complete on a breakout and close above $118.02. If bulls can sustain the breakout, the stock could resume its uptrend toward the pattern target of $144.46.

Contrary to this assumption, if the price turns down from the current level, the bears will again try to pull the price below the moving averages. If that happens, the stock could decline to the strong support at $91.58.

Sony share price technical analysis: Daily chart

Sony daily chart
Sony daily chart – Credit:

Sony’s stock price has been range-bound between $118 and $95. Though bears pulled the price below the range on 12 May, they could not sustain the lower levels. This suggests that the breakdown was a bear trap.

The bears made two more attempts to pull the price below the support but failed. That started a strong relief rally, pushing the stock to the overhead resistance at $118.02.

The bears defended the resistance on 24 September but the stock has made a ‘V’ shaped recovery and the bulls are again attempting to clear the overhead hurdle.

A break and close above $118.02 will indicate the resumption of the uptrend. The rising moving averages and the RSI near the overbought zone suggest the path of least resistance is to the upside.

The bullish momentum may weaken if the stock turns down and breaks below the moving averages. 

Sony stock: Buy or sell at these levels?

Sony’s share price analysis shows that indicators point to a possible upside in the near term. The bullish momentum may accelerate if the stock closes and sustains above $118.02 for a few days. This positive view will invalidate in the short term if bears pull the price below $109.

The views and opinions expressed in this article are those of the author alone and do not constitute trading advice. Trading and investing involve substantial risks, and you should always do your own research or contact your financial advisor before arriving at a decision. Never invest more than you can afford to lose.

Trade Sony stock: Sony shares price

Sony Corporation
Daily change
Low: 13867.2
High: 14025.5

Further reading:

Further reading: Sony posts a strong Q1 but warns on supply chain

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