SOUN Sound off!

Swing Trade Setup for SOUN: Probabilities and Returns

Posted on July 16, 2025, at 7:18 PM CDT

Overview

SoundHound AI, Inc. (SOUN) has caught the attention of swing traders due to its recent bullish price action and high short interest. With a current price of $11.78 as of July 16, 2025, SOUN presents a compelling setup for a short- to medium-term trade. This post outlines a swing trade strategy, including entry, targets, stop-loss, and a detailed probabilities and returns analysis.

Trade Setup

Based on technical analysis and sentiment from platforms like X, SOUN shows a bullish structure with potential for significant upside. Here’s the proposed setup:

• Entry Price: $11.50–$11.80 (ideal entry near $11.50 on confirmation of support)
• Targets:
  • Short-Term: $13.41 (~16.6% upside)
  • Mid-Term: $16.00 (~39.1% upside)
• Stop-Loss: $10.40 (~9.6% downside)
• Risk/Reward Ratio:
  • Short-Term: 1.74:1
  • Mid-Term: 4.1:1

Technical Analysis

Several indicators support the bullish case for SOUN:

• Price Action: A textbook 3-candle retest of the $11.50 breakout level, forming a higher low, signals bullish continuation.
• Ichimoku Cloud: Price is above the Kumo, with a bullish Tenkan-sen/Kijun-sen crossover.
• MACD: A fresh bullish crossover with a positive histogram since mid-May.
• RSI: Reset from oversold, indicating room for upside.
• Volume: Increasing volume on up days suggests institutional accumulation.
• Short Interest: 35% short interest raises the potential for a short squeeze if resistance at $12.29 is broken.

Support levels are at $11.12 and $10.40, with resistance at $12.29 and $13–$14. A break above $12.29 could target $16–$18 over 4–8 weeks.

Probabilities and Returns

The table below outlines potential outcomes, probabilities, and returns for a $10,000 position at a $11.50 entry price. Probabilities are estimated based on technical indicators, historical patterns, and market sentiment.

Scenario	Exit Price	Probability	Return (%)	Return ($)	Expected Value ($)
Bullish (Mid-Term)	$16.00	25%	39.13%	$3,913	$978.25
Bullish (Short-Term)	$13.41	25%	16.61%	$1,661	$415.25
Neutral (No Move)	$11.50	30%	0%	$0	$0
Bearish (Stop-Loss)	$10.40	20%	-9.57%	-$957	-$191.40
Total Expected Value					$1,202.10

Expected Return: 12.02% ($1,202.10 on a $10,000 position)

Risk Considerations

While the setup is promising, traders should be aware of the following risks:

• Volatility: SOUN’s beta of 2.87 indicates high price swings, increasing both upside potential and downside risk.
• Fundamentals: Negative earnings (-$0.61 EPS) and recent insider selling ($525M over five days) could dampen sentiment.
• Upcoming Events: Earnings on August 7, 2025, may introduce volatility.
• Market Conditions: Broader AI sector skepticism or macroeconomic factors could pressure speculative stocks.

Action Plan

To execute this swing trade:

1. Enter at $11.50–$11.80 on confirmation of support (e.g., bounce off $11.12 with strong volume).
2. Set a stop-loss at $10.40 to limit downside risk to ~9.6%.
3. Target $13.41 for a conservative exit or $16.00 for a momentum play.
4. Monitor resistance at $12.29 for breakout confirmation.
5. Stay alert for news, particularly earnings or AI sector developments.

Conclusion

SOUN presents a high-potential swing trade opportunity, driven by bullish technicals and short squeeze potential. The expected return of 12.02% and favorable risk/reward ratios make it attractive, but traders should manage risks carefully due to the stock’s volatility and fundamental challenges. Always conduct your own research before trading.

Disclaimer: Trading involves significant risks, including the potential loss of capital. This analysis is for informational purposes only and does not constitute financial advice. Conduct your own research or consult a financial advisor before making trading decisions.