Home Depot Inc/The (US: HD) Upside has reached a capped after a long period of not breaking and closing above US$340.00 psychological resistance level. Technical and price action further shows that the stock is poised for more downside correction.    

1. The rising wedge formation (dotted red line) signified a potential bearish reversal. Furthermore, the bearish divergence shown on the MACD added to the bearish’s outlook.
2. The bearish engulfing candle invalidate any bullish call after it rejects 78.6% and 88.6% Fibonacci retracement. Also, the bearish engulfing candle breaks below both the Tenkan-Sen and Kijun-Sen.
3. Senkou-Span A is flat and kumo is thinning, signifying thinning momentum for the bulls.
4. Diving into the falling wedge, we could spot a double top formation and if 38.2% Fibonacci retracement level is broken, then that will be the double top’s neckline resistance being broken.
5. MACD has shown a bearish cross and histogram is down.

*Expected timeline of the trade is 5 weeks from the date of report issuance.

CHART LEGEND

Ichimoku Kinko Hyo

Red dotted line = 26 periods Kijun-Sen

Blue dotted line = 9 Periods Tenkan-Sen

Green Line B= 52 periods Senkou Span B

Pink Line A = 26 periods Senkou Span A

Black line = 26 periods Chikou Span. Lagging line