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What Does a Technical Analysis Say about Ford’s Stock?

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Dec. 28 2016, Updated 9:05 a.m. ET

Technical analysis

So far in this series, we’ve covered Ford Motor Company’s (F) key performance indicators and highlights from 2016. While it’s important for investors to pay attention to a company’s fundamental drivers, it’s also important to be aware of the key support and resistance levels in its stock. 

Investors can use these support and resistance levels to refine their entries and exits from a company’s stock.

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Ford’s support and resistance levels

On December 22, 2016, Ford’s stock was trading at $12.40. In 2016 so far, the stock has underperformed its peers (XLY) General Motors (GM), Fiat Chrysler (FCAU), and Toyota Motor (TM) on Wall Street.

Just like GM’s price chart, Ford’s stock price has also been on a downtrend for the last couple of years. However, Ford’s price couldn’t breach the upper range of its descending price channel, unlike GM. In the chart above, we can see that Ford’s stock price began falling after it failed to breach the channel’s upper range. This upper range, which is near $13.60, will likely continue to act as a stiff resistance for the stock going forward.

On the downside, the price may find an immediate horizontal support level near $11.90, followed by a key support level near $11.20.

How to use technical levels?

Upward stock price movements may see resistance around resistance levels, and downward price movements may hit roadblocks around support levels.

However, a breach of support or resistance could trigger sharp price action. A stock’s price typically witnesses a sharp rally if a key resistance area is violated and a sharp fall if a key support level is violated. In both cases, investors could initiate favorable positions or manage their existing positions to benefit from these price levels.

In the next and final part of this series, we’ll explore what Wall Street analysts are recommending for Ford’s stock.

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