Weekly stock chart of Honda Motors (ADR: HMC)

Honda stock chart shows weekly trading range, testing support


As Honda stock tests price support-resistance levels on the weekly chart, you will have a decision to make as usual: buy, sell or hold if you already own shares; and the chart is there to help.

On a fundamental scale, Honda Motor Company (ADR: HMC) has the usual set of fine products being delivered to the world market. On the stock performance side, though, things have been a bit more volatile and driven by the Yen’s relation to the dollar, not to mention by the general market’s price actions.

As you know, Honda Motor Company reported last Tuesday that U.S. April sales fell 2.2% to 122,012 vehicles from 124,799 a year ago. For the record, U.S. sales of the best-selling Accord in April rose about 26% to 35,385 vehicles from a year ago.

Now look at the weekly chart for HMC. Looks a lot like of other stock patterns to me. There is a major low in the fall of 2011, followed by a peak in March that has since faltered. Check out a Toyota chart, for example, and it looks similar; just different price levels.

In particular, Honda stock’s support and resistance levels are as relevant as any other stock, because these turning points define where a changing of the guard from bull to bear and bear to bull occurred. And since market history has the proclivity for repeating itself, chances are past support levels and resistance levels will likely be challenged. Right now, HMC is about to challenge the lower 32.65 level, a past high that was broken. Honda closed Friday at 34.30.

Just be apprised that an upper resistance level when broken becomes future support. Likewise, when lower support is broken it becomes future resistance. And that’s how the game is played as traders watch these levels like a soaring hawk circle the air for prey.

Honda Stock Chart

On the high end, I see upper resistance first at the 39.35 level. Above that, another resistance level is 41.23 that dates back to last summer.

On the lower end, I already mentioned the 32.65 level. At 27.52 is a firm bottom. Whether that level will be tested this year is anyone’s guess. Fact is, nobody knows, not even the pro traders.

What is important are the factors that might contribute to Honda testing any of these levels, like new news, appreciation or depreciation of the Yen or the US Dollar. And you will have a decision to make as usual: buy, sell or hold if you already own shares.

For the record, I do not own any HMC stock at this time. Right now, I am operating under my own system that shows a sell trend bias on the weekly chart, a more long-range look. The WMA3 (3-bar weighted moving average) is still below the MA5 (dark blue 5-bar moving average) central line of the Keltner Band (noted by the grey lines).

Be apprised, though, on a daily chart the upward crossover of the WMA3 and the MA5 just occurred, but has not been confirmed by an up-close bar, where the close is higher than the open. (Hey, it’s my system, my rules and I try to obey them just to keep some sense of discipline.) Perhaps Monday’s close will help change that status.

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