The Cybersecurity stock sector, like most sectors, has its share of winners and losers. Vasco Data Security (VDSI) has seen its share price make some dramatic moves, and it looks like it has one more dramatic move left. That move appears to be to the downside which would possibly finish out a downtrend that has been going on for the last year and a half. Let’s review some charts.

Vasco Data Security (VDSI) – Monthly Chart Review

This first chart is a 5 year monthly chart for Vasco Data Security (VDSI). From an Elliott Wave perspective, when a stock falls short of forming a Bullish Impulse wave pattern (a 5 wave pattern) and instead forms a Zig-Zag wave pattern (a 3 wave pattern), the trend preceding the Zig-Zag wave pattern is continued.

Analyzing the Probability of Another Low During The Current Pullback

With a monthly MACD Histogram that is showing selling momentum that is increasing, the probability of a lower low during this downtrend looks pretty good. There was also an increase in the selling volume last month.

This price and volume activity seems to indicate that waiting for a break below the $12.35 area is best before going long again. If you are long, you may want to average down with some shares around the $123.35 support area.

Vasco Data Security (VDSI) – Short Interest

This next chart is a 1 year daily chart for Vasco Data Security (VDSI) that has its short interest totals by reporting date listed on it.

Analyzing Short Interest Totals for VDSI

Over the last couple of quarters, VDSI has seen its short interest totals reduced by approximately 75%. That is a substantial decrease during the time period that VDSI bounced around in the $15 – $18 price range.

Vasco Data Security (VDSI)

If you are long shares of Vasco Data Security (VDSI), selling shares at these levels is close to selling at the bottom. You would be better advised to average down a few shares and then look to dispose of everything during a rebound.

Watching VDSI’s daily chart is recommended for those looking to enter into a long position. That position should start to be built around the $12.35 area with a small scale-in purchase. But that is only if a bullish reversal candlestick pattern is identified and other bullish factors are seen in that area. Most importantly, I would make certain that the MACD Histogram on the monthly chart shows a decrease in selling momentum before purchasing any shares.