The kicker candlestick suggests lower prices may come again on Thursday, but for now, Ford remains trading in an uptrend. An uptrend occurs when a stock consistently makes a series of higher highs and higher lows on the chart.
The higher highs indicate the bulls are in control while the intermittent higher lows indicate consolidation periods.
Traders can use moving averages to help identify an uptrend, with rising lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term uptrend.
Rising longer-term moving averages (such as the 200-day simple moving average) indicate a long-term uptrend.
A stock often signals when the higher high is in by printing a reversal candlestick such as a doji, bearish engulfing or hanging man candlestick. Likewise, the higher low could be signaled when a doji, morning star or hammer candlestick is printed. Moreover, the higher highs and higher lows often take place at resistance and support levels.
In an uptrend, the “trend is your friend” until it’s not, and in an uptrend there are ways for both bullish and bearish traders to participate in the stock
Ford reversed course into an uptrend on May 16 and has since made a consistent series of higher highs and higher lows. The most recent higher high was formed on Tuesday at $12.78 and the most recent higher low was printed at the $11.25 mark on May 24.
Although Ford’s bearish kicker candlestick suggests lower prices could come on Thursday, the stock could also trade sideways to consolidate the recent downturn. If that occurs, Ford may print an inside bar pattern on the daily chart.
On Tuesday, when Ford printed its last higher high, the stock rejected near the 200-day simple moving average (SMA), which brought in sellers. Bullish traders want to see the stock consolidate under the 200-day SMA for a longer period of time to possibly gain the strength to regain the 200-day as support.
Bearish traders want to see Ford break down below Wednesday’s low-of-day and then for big bearish volume to come in and cause the stock to form a lower low. If that occurs, Ford’s uptrend will be negated and a downtrend could be on the horizon.
Ford has resistance above at $12.79 and $13.55 and support below at $11.99 and $11.17.
Produced in association with Benzinga
Edited by Jessi Rexroad Shull and Alberto Arellano