Ford Plunges 10% In 4 Days, But Here's Why A Bounce Is On The Horizon

Ford Motor Company F was plunging more than 5% on Friday, for a total decline of about 10% since Tuesday.

The big slide south has been in tandem with the general market, which has seen the S&P 500 plummet almost 7% since it opened on Tuesday, when better-than-expected consumer price index data for November caused the ETF to gap up to $410.

Although CPI data showed inflation is slowing, prompting the Federal Reserve to dial its benchmark interest rate hike from a possible 0.75% to 0.5% on Wednesday, the Fed said it expected inflation to remain elevated in 2023, which spooked investors.

Despite current economic conditions meaning consumers have less to spend, Ford hiked the price of its F-150 Lightning EV truck for the third time. The vehicle, recently 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 unveiled.

The sharp decline in Ford’s stock means a bounce is likely on the horizon, although traders will want to watch for signals that the 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 Dec. 9. Because Ford has plunged 10% without bouncing to form its next lower high, a relief rally is likely imminent.

• Ford is also likely to bounce over the next few trading periods because the stock’s relative strength index (RSI) is measuring in at about 33%. When a stock’s RSI nears or reaches the 30% mark, it becomes oversold, which can be a buy signal for technical traders.
• Traders looking to play a bounce can watch for Ford to eventually print a bullish reversal candlestick, such a doji or hammer candlestick, which could indicate the temporary bottom is in. If Ford pushes higher later on Friday to form a lower wick, the reversal to the upside could be in the cards for Monday.
• If Ford closes the trading session near the low of day price, the stock will print a bearish kicker candlestick for the third time in a row, which could suggest lower prices will come again on Monday. If that happens, a more immediate rally could be in the cards because when a stock gaps up or down for three consecutive times 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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