Technical Tuesday: Toyota Motor Corp.

Quarterly

Resistance built up in the region of ¥8500 managed to hold the price back and subsequently push it back down significantly. Where price is sitting currently ¥5000 marks an important deciding point in the direction of price when seeing the polarity it's offered this stock since 2008. 

Two scenarios could take place depending on price action: 

• The Japanese Yen weakens which directly influences the price of cars manufactured thus driving sales higher. With sales increasing the stock price should respond in the same manner. 
• The Japanese Yen continues strengthening as it has been for the past two years causing the price to fall below ¥5000 to the next support of ¥2500. 

Both scenarios seem likely however the probabilities are slightly in favour of the bulls here when weighing in that price remains above the 50 Simple Moving Average (Yellow Line) and the stochastic lies within oversold territory creating divergence in the process. 

Although the prospects look bright we're only 12 days into the quarter accepting that a lot can still happen in a space of three months. 

Weekly

The most notable feature on this chart is the technical topping formation of the cup and handle that's broken to the downside. We've witnessed a rush into the selldown with little chance for those planning a short side trade to enter. The price movements have lost considerable ground to the 200 SMA (Blue Line) and price now lies below it and the 50 SMA. 

This put the bulls on an unsteady footing going into the next few weeks in trying to attain their presence. Admittedly price does lie some distance away from the downtrend which does suggest sellers complacency setting in. 

Possibilities of a throwback are likely but should be observed with a great deal of attention to assess whether the strength exhibited by the bulls is strong enough to push price above both long term moving averages. If they can't the move should be considered as a chance to re-enter a short position. 

The moving averages are heading into a technical storm which is termed a "death cross"where the 50 crosses below the 200, if that were to happen we'll likely see a selloff ensue.