Watch These Ford Price Levels as Stock Drops After Automaker Issues Soft Outlook

Shares in Ford (F) fell sharply in extended trading on Monday after the automaker posted third-quarter profit below Wall Street expectations and trimmed its full-year outlook amid ongoing high warranty costs, supply chain issues, and intensifying competition.

CEO Jim Farley told analysts on the earnings call that the auto industry is in a global price war, driven by overcapacity and a flood of new electric vehicle (EV) companies.

The Detroit-based automaker said its EV business lost $1.2 billion in the third quarter on sales of about 32,000 vehicles and booked a $1 billion charge to write down several EV-related manufacturing assets. Prior to Monday’s post-market fall, Ford shares had tumbled around 7% year-to-date

Below, we break down the technicals on Ford’s weekly chart and discuss important post-earnings price levels to watch out for.

Ascending Triangle in Focus

Since bottoming out in early August, Ford shares have consolidated within an ascending triangle, a chart pattern that can signal a move lower if formed within an established downtrend, which is the case on the automaker’s chart.

Indeed, the stock sits poised to test the pattern’s lower trendline after the company’s soft quarterly results, potentially opening the door for further post-earnings selling. The stock dropped 6% to $10.69 in after-hours trading Monday.

Let’s analyze Ford’s chart to identify three key support levels that investors will likely be watching and point out a major overhead area worth monitoring.

Key Support Levels to Watch

Upon a decisive breakdown below the ascending triangle, investors should monitor the $9.50 level. This location could attract buying interest near a trendline connecting a range of price action on the chart between August 2019 and this year’s early August low.

A move lower could see the shares fall to around $8.70, an area where investors may seek entry points near a period of narrow consolidation in the second half of 2019, which also corresponds with the April 2021 pullback low.

Ongoing selling could drive a bearish move down to the $7.50 region, where the stock would likely encounter support near the top trendline of a prior ascending triangle that formed on Ford’s chart in the months after the March 2020 pandemic low.

Major Overhead Area to Monitor

If the stock makes a recovery, investors should keep a close eye on the $11.30 area, a level where shares may run into considerable overhead selling pressure near a trendline connecting multiple troughs dating back to January 2021. A volume-backed breakout above this major resistance could act as a catalyst for a bullish trend reversal.

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As of the date this article was written, the author does not own any of the above securities.