Ford's Stock Looks Bullish If This Key Support Holds

Ford Motors Co F made a bullish trend change after printing better than expected second-quarter earnings last week. The automaker also raised its full-year 2021 guidance by about $3.5 billion, to $9 to $10 billion, despite the global chip shortage.

On Monday, at an event hosted by Barclays, Ford COO for North America Lisa Drake said she expects the chip shortage to linger into June 2022 but that the situation is becoming progressively better. Drake also announced Ford plans to spend more on EVs than traditional internal combustion vehicles starting in 2023.

As Ford, and other traditional automakers such as General Motors Co GM, continue to shift their business model to EVs they become more direct competitors to all-electric companies such as Tesla Inc TSLA and NIO, Inc NIO. With the EV sector turning bullish, and Tesla breaking through key resistance at $700, Ford’s stock could be ready to run.

The Ford Chart: When Ford reported earnings on June 28, its stock gapped up and broke up from a descending trendline but then charged into a resistance level $14.23. At the resistance level, sellers came in and the stock closed near its low of the day, which caused the stock to print a shooting star candlestick. For technical traders, this indicated lower prices were on the way and on Friday Ford retraced and filled the gap.

The retracement also caused Ford’s stock to retest support of the descending trend line and the support held. If the support continues to hold, and Ford doesn’t at $13.62 the stock will hold its new uptrend. The uptrend began on July 19 when the stock put in a bottom at $12.79, after a multi-week downtrend, and began to create higher lows and higher highs.

Ford is trading slightly below the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending below the 21-day EMA, both which are bearish indicators. Both EMAs are within 2% of Ford’s stock, however, and Ford could easily regain them. Ford is trading above the 200-day simple moving average which indicates overall sentiment in the stock is bullish.

Bulls want to see Ford’s stock hold above $13.62 to maintain the uptrend and for big bullish volume to come in and push the stock up to make a higher high above $14.23. If Ford can regain the level as support, it has room to move up to $15.52.

Bulls want to see big bearish volume continue to drive Ford’s stock down below the descending trendline, which would cause it to lose support at $13.62. If Ford is unable to hold the level it could fall toward the $12.79 mark.