Ford rally might not be finished yet

Denver, CO, 07/09/2013 (Avauncer.com) – Ford Motor Company (NYSE:F)  (Closed: $16.81  Up: 0.66%) is actually accelerating its already impressive rally. On December 31, 2012 it broke out of an Adam & Eve Double Bottom pattern and has reached very close to the pattern target of $17.22. Just when one would think of the booking profits in these areas, the stock has broken out of a rising channel that started from the July 2012 bottom.  Breakout on the upside of a rising channel implies either immense strength or a blowout move. For this rally to end in a blowout move, we need to see a day of explosive volume, which is absent till now and big daily range of price movement where the price closes near day’s low. We are yet to see any of those.

Both the big weekly channel and much smaller daily channel shows the importance of the zone of $16.55-$16.65. As long as this zone supports the price, we could expect more rally. The conservative target we get applying Elliott wave theory comes at $17.63 which is not far away from the pattern target of $17.22 mentioned above.

There is no weakness seen in the indicators in the daily time frame. MACD is nicely rising with the price and RSI too is doing the same. The lack of any negative divergence gives strength to the bullish scenario. If the current momentum is intact, then the next spurt could come in next 2 days. The best the bears can expect at this point is a sideways move. Some investors could be scared of keeping positions after this much rally and they could book some profits. That would be fine but any shorting before price confirmation could be suicidal.

But one should always be cautious about the unexpected and ready for a reversal. The first point of weakness would be a move below $16.48 - $16.50.