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Ford Motor Company F plunged more than 5% on Friday, for a total decline of about 10% since Tuesday.
The big slide south coincided with the overall market, which saw the S&P 500 fall nearly 7% since its open on Tuesday, when better-than-expected consumer price index data for November turned causing the ETF to grow to $410.
Although the CPI data showed that inflation has slowed, prompting the Federal Reserve to dial back its benchmark interest rate hike from a possible 0.75% to 0.5% on Wednesday, the Fed said it expects inflation to remain high in 2023, spooking investors.
Despite current economic conditions that mean consumers have less to spend, Ford has raised the price of its F-150 Lightning EV truck for the third time. The vehicle, named the “2023 MotorTrends Truck Of the Year,” now has a $55,974 price tag for the base trim model, up from $40,000 when the vehicle was announced.
The sharp drop in Ford stock means a bounce is likely on the horizon, although traders will want to watch for signals that a temporary bottom is in.
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The Ford Chart: Ford has been trading in a downtrend since Nov. 11, with the most recent lower high formed on Tuesday at $13.92 and the most recent confirmed lower low printed at the $13.04 mark on December 9. As Ford fell 10% without bouncing to form the next lower high, a relief rally is likely imminent.
- Ford is likely to bounce back in the next few trading sessions as the stock’s relative strength index (RSI) measures around 33%. When a stock’s RSI approaches or reaches the 30% mark, it becomes oversold, which can be a buy signal for technical traders.
- Traders looking to play the bounce can watch for Ford to eventually print a bullish reversal candlestick, such as a doji or hammer candlestick, which could indicate that a temporary bottom is in. upside may be in the cards for Monday.
- If Ford closes the trading session near the low price of the day, the stock will print a bearish kicker candlestick for the third time in a row, which could suggest that lower prices will come again on Monday. If that happens, a more immediate rally may be in the cards because when a stock breaks or drops three times in a row it is a reversal indicator.
- Ford has resistance above at $12.79 and $14.34 and support below at $11.99 and $11.17.
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