Ford Motor Company (NYSE:F): May Bounce Now If $16.40 Provides Support
Dallas, Texas, 09/16/2014 (ustrademedia) – Even a good number from the European market, for the first time in the last six years could not pull Ford Motor Company (NYSE:F) (Closed: 16.47, Down: 0.72%) up as it trades close to the lowest point of the previous three months. For the last 9 sessions, it has been in a free fall from the high of $17.87, on the back of the National Highway Traffic Safety Administration’s investigation into 61 complaints regarding Ford Fiestas. It is not clear yet it the investigation will result into a recall, but the market doesn’t like uncertainties and the recent price action of the stock makes that sufficiently clear. The volume has dried up as seen from the Monday volume of 23.63 million against an average of 24.37 million.
The stock made its life high at $40.72 in 1999 like the IT stocks and then followed that sector to crash to $6.58 in 2003. The crisis of 2008 brought the Ford Motor Company (NYSE:F) on the verge of getting wiped out, but a government bailout pulled it out of the mud. It rallied back to $18.97 before correcting to $8.82 by 2012 and bouncing back to $18 levels. At the end of all these years, it shows a huge Cup & Handle pattern with immense bullish possibilities, with the handle forming its own smaller Cup & Handle pattern. The larger pattern will get triggered only on a break above $20.
In the medium term, the trend remains weak below $18 levels, which is acting as a stiff resistance since 2011 but in the short term, the price has reached an important support area at $16.40 levels. The recent fall from $17.87 to $16.42 and the previous fall from $18.02 to $16.72 are equal in magnitude, creating the possibility of a Flat correction getting completed.
A bounce today from the $16.40 levels would strengthen this bullish possibility. Expect short term resistance from the band of $16.70-$17.30.