A Look at the Daily and Weekly Breakout in Ford F
If you haven’t been watching it closely, you may have missed the recent strong breakout in the share price of Ford Motor Company (F).
Not only does the daily chart reveal a strong breakout, but the weekly chart shows a steady structure of higher prices in a comfortable uptrend that’s worth a glance.
Let’s take a look first at the daily chart breakout:
Ford (F) shares faced critical overhead resistance at the $12.00 per share level, which was wiped away last week with an initial close above resistance that led to a gap and “run” higher as we’re seeing continue today.
Shares touched the $13.00 level, though there really isn’t any major chart resistance until shares test the prior price high of 2010 at the $14.25 level. We would call this “Open Air.”
For a bit of education, look at the “Three Push Pattern” and triple-swing positive momentum divergence that undercut (failed to confirm) the recent price low under $10.00 per share, which preceded the current rally we’re seeing. It’s very important to watch momentum along with price.
Now that shares are in breakout mode, the question becomes “how high will it go?”
For a bit of perspective, let’s raise the frame to the weekly chart:
Ford also shows why I use moving averages so frequently as references.
Notice the nice pullback to the 20 and 200 moving average confluence in September 2009 that provided a good buy-in support level that preceded the continued rally.
Next, we see the 50 week EMA holding steady at $10.00 per share, which is where price formed the daily chart’s “Three Push” triple swing positive momentum divergence.
If anything, this convergence of the 50 week EMA on the weekly chart and “Three Push” divergence pattern on the daily chart show how to integrate dual timeframes into trading decisions.
What now?
Again, there are no obvious resistance levels (no moving averages, no trendlines, no prior price levels) until price tests the prior high at the $14.00 level, that is, if buyers can push above the “round number” $13.00 nominal level.
Study the chart of Ford (F) closer to see these examples and other insights you might pick up that you can use when similar situations repeat in other stocks.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Although there are no obvious resistance levels, but what about the Overbought level from Stochastic ?
Hi,
Wanted to ask you something. In the above shown daily chart, even though the price has cleared an important resistance level of $12, I think there are 2 considerations here:
1) The lower low structure is still in place, even though the stock has managed a higher high;
2) The 20 EMA even though rising sharply is still below the 50 EMA;
Would you please care to comment on my above mentioned 2 doubts.
Regards
Vipul Ramaiya
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