Are the charts suggesting to buy the dip in AeroCentury Corp?

Shares of AeroCentury (NYSE American: ACY)  closed almost 20%, $11.41 lower on Monday.

It was a tough trading session on Monday for ACY as selling volumes were extremely high during the day and buyers were nowhere to be seen.

After a 10% surge in the price of ACY last week, this could be the long-awaited correction after September’s large gains. Patient investors waiting for a lower entry point should start paying closer attention to ACY’s price action.

• ACY has a demand zone at $46, thus there is a chance that it will reverse from the demand zone.
• On Monday the RSI was at its support of 50 which is hinting towards a reversal.
• If the demand zone is broken, the next support is at $38 which is a very crucial zone for ACY and it is looking very weak below that mark.
• If selling pressure does not reduce on Tuesday then a breakdown will be witnessed and no long entries should be taken until $38 is approached.
• ACY could make a new all-time high once this correction is over, this is why ACY is a perfect buy the dip stock.

ACY weekly chart

• Selling volumes were extremely high on Monday, which is suggesting that ACY may not give a reversal at $48.
• A long entry should only be taken when a clear reversal of the trend is seen, else it may prove to be very risky entering a long as ACY is still looking very weak.
• Once a reversal is seen, potentially a new high can also be achieved by ACY
• Stop losses are very crucial in a stock like ACY as it has proved how volatile it is by a 20% fall on Monday

Conclusion

ACY has some great potential but patience is key here. An entry at current levels is not recommended and investors need to wait for confirmation of a clear reversal before buying. Shares of AeroCentury were trading in the red on Tuesday and the stock could test the $38 levels.

Only at that point should investors consider buying AeroCentury stock.