Why Ford's Stock Looks Geared Up For A Long Drive North

On Sept. 23, Ford Motors Company F broke up from a descending trendline that had been holding it down since the June 4 52-week high of $16.45.

Ford’s stock shot up over 11% during the four trading days that followed and reached a high of $14.73 before entering into consolidation.

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The Ford Chart: The sharp rise higher paired with the consolidation has settled Ford into a bull flag pattern on the daily chart. The pole was created between Sept. 22 and Sept. 28 and the flag between Sept. 28 and Friday.

On each of the four days of consolidation, Ford has tested the bottom of the flag pattern as support and wicked from the level. This indicates traders are buying the dip and may believe a bullish break from the pattern is in the cards.

On Friday, Ford was in the process of printing a bearish red candlestick. This may indicate the stock needs further consolidation before attempting a bullish break. Ford’s relative strength index (RSI) was also running hot just above the 60% level and another day or two of consolidation will help to further cool the RSI.

Ford is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading above the 200-day simple moving average, which indicates overall sentiment is bullish.

• Bulls want to see big bullish volume if Ford’s stock breaks up from the bull flag for confirmation the formation was recognized. There is resistance above at $14.23 and $14.80.
• Bears want to see Ford’s stock continue to trade downwards until it loses support at the eight-day EMA, which would negate the bull flag. The stock has support below at $13.62 and $12.79.