Ford Consolidates After Charging North: Here's What To Watch For Next

Ford Motor Company F was trading slightly lower on Thursday afternoon, in consolidation, after soaring up nearly 12% between Monday and Wednesday.

Despite the company reporting an 8.9% decline in U.S. vehicle sales for the month of September on Tuesday, Ford tripled its electric vehicle sales for the month, surging 197.3% over August’s EV sales.

On Wednesday, Morgan Stanley analyst Adam Jonas upgraded Ford from Equal-Weight to Overweight and announced a $14 price target. The new price target suggested about 13% upside from Ford’s current share price.

Technically speaking, Ford looked set to bounce higher prior to the release of September sales numbers because the stock had fallen into oversold territory last Friday. On Monday, Ford printed a hammer candlestick on the daily chart, which indicated a reversal to the upside was likely imminent.

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The Ford Chart: On Thursday morning, Ford temporarily broke up from an inside bar but ran into a group of sellers who dropped the stock back down into Wednesday’s trading range. Although the inside bar pattern has now been negated, if the stock breaks up or down from Wednesday’s range on Friday on higher-than-average volume, traders and investors can use the break to gauge the future direction.

Ford’s sideways trading was taking place on lower-than-average volume, which indicates consolidation and is bullish. After a stock makes a large move in either direction, consolidation is needed in order to prepare for the next move.

When Ford continued to trade higher on Wednesday, the stock negated a downtrend it had been trading in since Aug. 16 by printing a higher high above the most recent lower high. For an uptrend to confirm, Ford will need to print a higher low above $11.13 over the coming trading days.