Honda Motor Slumps 3.86% Amid Technical Breakdown And Heavy Volume

Honda Motor (HMC) declined 3.86% in the latest session, closing at 29.11 with substantial volume expansion. This bearish momentum aligns with key technical patterns observed across multiple indicators.
Candlestick Theory
A three-candle pattern emerged recently: a bearish engulfing formation on July 7 (29.11 close after 3.86% drop) swallowed the prior two bullish candles (July 2-3). This signals rejection near the 30.30-30.50 resistance zone established from May-June highs. Immediate support resides at 28.80-29.00 (June 30 low + psychological level), while breakdown below 28.60 would target the 200-day swing low of 27.33.
Moving Average Theory
The 50-day SMA (~29.85) recently crossed below the 100-day SMA (~30.10), forming a "death cross" that confirms intermediate bearish bias. Price trades decisively below all key SMAs (50/100/200-day), with the 200-day SMA flattening near 29.30. This stacked resistance suggests sustained downward pressure unless reclaimed.
MACD & KDJ Indicators
MACD histogram shows accelerating negative momentum, with the signal line maintaining bearish divergence since mid-June. Meanwhile, KDJ’s K-line (19.4) and D-line (25.1) penetrate oversold territory (<20) but without bullish crossover confirmation. This signals strong downside momentum that may extend despite short-term oversold readings.
Bollinger Bands
Price breached the lower Bollinger Band (29.45) with the bandwidth expanding sharply—a volatility breakout typically favoring continuation of the current trend. The 2.5 standard deviation gap from the 20-day moving average underscores extreme bearish momentum. Mean reversion attempts would require stabilization above the lower band.
Volume-Price Relationship
The July 7 decline occurred on 126% higher volume than the 30-day average, validating bearish conviction. Notably, all significant down days since May (e.g., May 13’s -4.20%, June 30’s -2.93%) featured above-average volume, whereas recovery rallies lacked volume confirmation—a hallmark of distribution.
Relative Strength Index (RSI)
14-day RSI (28.7) entered oversold territory, approaching levels last seen during March’s 26.61 trough. However, bearish RSI divergence developed in June as higher price highs (30.93→30.28) corresponded with lower RSI highs (58→49), foreshadowing the current breakdown. Historical oversold thresholds near 25 may offer initial support.
Fibonacci Retracement
Using the March 4 low (27.33) and May 12 high (30.93), critical Fibonacci levels align with observed price reactions: the 38.2% retracement (29.45) failed as resistance, while the 50% level (29.13) matches current price action. Next material support appears at the 61.8% retracement (28.52)—a level previously tested in June.
Confluence exists at 28.50-28.80, where the 61.8% Fibonacci level overlaps with June’s volume-weighted support and oversold RSI/KDJ readings. However, MACD acceleration and volume-backed breakdown suggest dominant bearish momentum. Divergence appears between oversold oscillators (RSI/KDJ) and trend indicators (MACD/MAs), indicating potential technical bounces within a broader downtrend.