Home improvement retailer Home Depot (HD) has struggled to overcome chart resistance in the $330-$340 area the past 12 months, but now prices are looking to retest the support in the $270 area. A break of this chart support could precipitate further declines.
Let's see the blueprints, err, the charts and the indicators.
In this daily bar chart of HD, below, I can see a downside price gap in February that started a downward move. Prices are trading below the negatively sloped 50-day and 200-day moving average lines. The On-Balance-Volume (OBV) line has been stalled the past four months. The Moving Average Convergence Divergence (MACD) oscillator turned bearish in late February when it moved below the zero line.
In this weekly Japanese candlestick chart of HD, below, I see a vulnerable chart picture. Prices are trading below the 40-week moving average line. The candles have been mostly bearish (red) with no lower shadows to tell us that traders are rejecting the lows. The OBV line peaked in late 2021. The MACD oscillator has slipped below the zero line for a new outright-sell signal.
In this daily Point and Figure chart of HD, below, the software is projecting a potential downside price target in the $230 area.
In this weekly Point and Figure chart of HD, below, the X's and O's suggest a downside target in the $230 area.
Bottom line strategy: Everyone seems to be saying that the housing market is slowing, because of higher mortgage rates. I wouldn't argue against that, but would suggest it is having an impact on the price of HD. I anticipate lower prices for HD in the weeks ahead.
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