Nissan Motors (
NSANY) has fared somewhat better this year -- at least the Japanese automaker is up year-to-date. But Nissan has still significantly underperformed the S&P since the start of the year -- and it's underperformed Japan's
Nikkei 225 index by a much larger margin.
Now Nissan looks likely to drop. Here's why.
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Nissan is currently forming a descending triangle pattern, a bearish setup that's formed by downtrending resistance above shares and horizontal support to the downside at $20. Basically, as Nissan bounces in between those two technical levels, it's getting squeezed closer and closer to a breakdown below that $20 support line. When that happens, look out below.
The setup in Nissan isn't exactly textbook. This stock spent the preceding months before the descending triangle pattern consolidating sideways, rather than slipping lower. But that doesn't change the trading implications of Nissan right now. If shares can't catch a bid at $20, it's time to sell.