Harley Davidson (NYSE: HOG) tumbled on Monday after US President Trump backed a boycott of the company if it decides to move production overseas. Tensions between the President and the company have started following the EU’s decision to respond to the steel and aluminum tariffs, by pledging to raise tariffs on US imports including Harley-Davidson motorcycles, with the company announcing plans to shift production to overseas facilities.
From a technical standpoint, Monday’s slide brought the price below the upside support line drawn from the low of the 3rd of May, and although the stock rebounded on Tuesday, the recovery stayed limited near that line. On Wednesday, Harley slid again, breaking below the 41.10 support barrier.
In our view, this may have opened the way towards the psychological round number of 40.00, also marked by the low of the 1st of June. If that level fails to stop the price from dropping further, then we may see downside extensions towards the 39.25 zone, defined by the low of the 3rd of May.
Taking a look at our short-term oscillators, we see that the RSI hit support near its 30 line and turned up, while the MACD, although below both its zero and trigger lines, shows signs that it could start bottoming. These indicators suggest that a corrective bounce may be on the cards today before, and if, the bears decide to shoot again.
A move back above 41.10 could confirm the case and may open the way towards the crossroads of the aforementioned upside line and the 42.00 resistance level, marked by the inside swing lows of the 1st and 2nd of August. However, even if this is the case, we would still see a decent chance for the bears to jump back in from near the crossroads. We would like to see a clear close above 42.00 before we abandon the bearish case. Such a move could set the stage for upside extensions towards the 43.08 territory, the break of which could open the path for the 43.97 zone, defined by the peak of the 9th of August.
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