Hon Hai Precision Industry (Foxconn) at “make or break” level
Matt Weller, CFA, CMT February 1, 2021 5:08 PM
The stock of Hon Hai Precision Industry (2317), better known as Foxconn, has been on a rampage since the start of December.
While the consumer-facing “big tech” stocks like Apple (AAPL) and Tesla Motors (TSLA) garner all the headlines, strong end-consumer demand also helps “upstream” suppliers of smartphones and parts for EVs.
The stock of Hon Hai Precision Industry (2317), better known as Foxconn, has been on a rampage since the start of December. The company, which is best known as the exclusive assembler of Apple’s (AAPL) 5G iPhone 12 Pro and iPhone 12 Pro Max, recently reported strong sales, prompting Wall Street analysts to raise price targets on the stock. Separately, the firm also signed a deal to manufacture vehicles for Byton Ltd., a high-profile Chinese EV startup, in addition to its ongoing supplier arrangement with Tesla. In today’s climate, it would be hard to pick a better combination of businesses for a manufacturer than smartphones and electric vehicles!
Hon Hai Precision Industry technical analysis
As the chart below shows, the stock spent the first 11 months of 2020 in an ever-tightening “symmetrical triangle” pattern. Following the breakout from this pattern on 7 December, the stock embarked on a high volatility rally all the way up to $125 by the middle of last week before pulling back to the 20-day EMA to close the week.
Moving forward, bulls are looking to make their stand near current levels. As long as the stock holds above its rising 21-day EMA, the path of least resistance will remain to the topside, with potential for a retest or break above the 3-year high near $125. On the other hand, a break below this support level would point to a deeper retracement toward the 50-day EMA near $100 next:
Source: TradingView, GAIN Capital
Learn more about equity trading opportunities.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.