Ford's Bullish Engulfing Pattern and 3.36% Rally Signal Short-Term Optimism Amid Mixed Momentum Signals

Candlestick Theory

Ford Motor’s recent price action suggests a potential bullish reversal. Over the past 10 sessions, the stock has oscillated between $11.37 and $12.315, with the 2025-09-26 close at $12.01 forming a bullish engulfing pattern as it closed above the prior session’s high. Key support levels are identified at $11.62 (2025-09-25) and $11.37 (2025-09-25), while resistance is at $11.83 (2025-09-24) and $12.315. The recent rally may indicate a short-term shift in sentiment, but a break below $11.37 could trigger further downside.

Moving Average Theory

The 50-day moving average (calculated as $11.56) is currently above the 200-day MA ($11.35), suggesting a bullish trend in the intermediate term. However, the 100-day MA ($11.49) aligns closely with the 200-day, indicating a lack of strong long-term momentum. The narrowing gap between the 50-day and 200-day MAs implies weakening upward pressure, raising the possibility of a trend reversal if the 50-day MA crosses below the 200-day.

MACD & KDJ Indicators

The MACD histogram has shown a recent positive divergence, with the line crossing above the signal line on 2025-09-22, signaling a potential bullish crossover. However, the KDJ indicator (K=68, D=62, J=73) suggests overbought conditions, as the %K line is approaching the 70 threshold. This divergence between MACD and KDJ highlights a mixed signal: while momentum is accelerating, the overbought reading warns of a possible pullback.

Bollinger Bands

Volatility has expanded recently, with the 20-period Bollinger Bands widening from a 2.5% range to 3.5%. The price closed near the upper band on 2025-09-26, indicating overbought conditions and heightened volatility. If the bands contract again, it may signal a period of consolidation, but a sustained break above the upper band could validate a new bullish trend.

Volume-Price Relationship

The recent 3.36% rally on 2025-09-26 was accompanied by a surge in volume (117.7 million shares), which supports the price increase’s legitimacy. However, the volume has been inconsistent over the past week, with a 30% drop on 2025-09-23 despite a 0.60% price gain. This weak volume-confirmation pattern suggests the rally may lack follow-through unless accompanied by a sustained volume increase.

Relative Strength Index (RSI)

The 14-day RSI stands at 62, indicating moderate strength but not overbought territory. A move above 70 would suggest overbought conditions, while a drop below 50 could signal weakening momentum. The RSI has shown a bearish divergence in the past two weeks, with lower highs despite mixed price action, which may foreshadow a correction.

Fibonacci Retracement

Key Fibonacci levels derived from the 2025-08-22 high ($11.81) and 2025-06-03 low ($10.02) include $11.20 (38.2%), $10.70 (50%), and $10.30 (61.8%). The current price of $12.01 is above the 23.6% retracement level, suggesting that a pullback to the 38.2% or 50% levels could offer strategic entry points.

Backtest Hypothesis

The backtest of a MACD Golden Cross/Death Cross strategy from 2022 to 2025 yielded a 7.31% return, significantly underperforming the benchmark’s 35.89%. This poor performance aligns with the technical analysis, as Ford’s price action has shown frequent divergences between momentum indicators (e.g., MACD vs. KDJ) and inconsistent volume confirmation. The strategy’s Sharpe Ratio of 0.07 underscores its low risk-adjusted returns, likely due to Ford’s high volatility (26.83%) and lack of clear trend persistence. The recent overbought RSI and bearish Fibonacci retracement levels further validate the strategy’s limitations, suggesting that alternative approaches, such as sector-specific fundamental analysis or volatility-based trading, may be more effective for Ford’s stock.