Technical Analysis – J&J opens with a positive gap, but outlook remains gloomy

The Johnson & Johnson stock opened with a positive gap on Tuesday, after the firm forecasted annual profit above Wall Street’s estimates. However, the share price was quick to cover that gap and hit support slightly above the key territory of 167.00. Overall, since the break below 175.00, J&J has been in a downtrend mode and thus, further declines cannot be ruled out.

The RSI has fallen fractionally below 30, while the MACD is running below both its zero and trigger lines. Both indicators point to strong downside momentum, which corroborates the view that further declines may be in store.

A decisive break below 167.00 could confirm the notion and perhaps pave the way for the 163.00 territory, marked as support by the low of October 18. If there is no buying interest near that area either, the downtrend may extend towards the 161.00 zone, or the lows of October 7 and 10 at around 159.00.

The move signaling that investors are interested again in this stock may be a rebound back above 175.00. The share price will be above all three of the plotted exponential moving averages, with the next resistance area perhaps being at around 178.00. If that zone gets broken, the next and more important obstacle may be around the 180.75 territory, marked by the highs of December 14 and January 6.

Summing up, the J&J stock opened with a positive gap today but came instantly under selling interest. A clear break below 167.00 may signal the continuation of the prevailing downtrend and perhaps see scope for larger declines.

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