Stock of the day: Home Depot
07 March 2025
In today’s Stock of the Day, we’re analyzing Home Depot (HD), which is showing a clear reversal pattern on the daily chart. The formation in focus is a head and shoulders pattern, marked with a yellow rectangle, which is now fully formed and just waiting for confirmation.
The final step toward a long-term bearish signal is a breakout of the neckline, which is marked in blue on the chart. If the price closes below the neckline today, it would confirm the sell signal, indicating further downside potential.
Additionally, Home Depot is also testing a key green uptrend line, which aligns with the neckline. A confirmed break below both the blue neckline and the green trendline would serve as a strong confirmation of a negative sentiment, potentially pushing the stock significantly lower.
Trading Scenarios:
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Bearish View: If Home Depot closes below the blue neckline and green uptrend line, it would be a clear signal to sell, reinforcing the head and shoulders pattern as a major bearish setup.
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Bullish View: If the price holds above the long-term green trendline and bounces off the neckline, it would indicate a denial of the head and shoulders pattern, turning into a buy signal instead.