Stock of the day: Home Depot

Home Depot is currently showing a technically significant bearish setup, with strong indications that sellers have regained control of the market.

The broader bearish context is set by a head and shoulders pattern marked with blue color. This classic reversal formation has already set the tone for the market, suggesting that a deeper correction may be underway.

After forming this pattern, the price made a bullish correction during April and May, rebounding from the orange horizontal support toward the yellow resistance, which acts as the neckline of the head and shoulders.

However, this recovery lost steam quickly. The attempt to break above the neckline resulted in a false breakout, clearly marked with the red color on the chart. This false move was sharply reversed, indicating a trap for buyers and renewed dominance by the sellers.

As long as the price remains below the yellow neckline, the sentiment remains negative. The technical target is a retest of the orange support, the area where the price previously found a local bottom in April.

Source: https://www.axiory.com/analytics/stock-of-the-day/stock-of-the-day-home-depot-2