Current trend

Shares of The Home Depot Inc., the largest home improvement company, are trading within the medium-term upward channel, however, at the beginning of this month they adjusted downwards and are currently testing its lower limit around 343.75 (Murray level [4/8]).

Today, the company's financial report for the second quarter will be published, which may determine the further movement of quotes: profit growth is expected to be restrained, as buyers are still postponing large purchases for home improvement due to high interest rates and limited financial opportunities. The revenue of The Home Depot Inc. may amount to 43.79 billion dollars, 1.6% more than in the previous year, and adjusted earnings per share (EPS) – 4.53 dollars, 2.6% less than a year earlier, while sales may decline for the seventh time in a row, this time by 2.39%, and the average receipt amount – by 0.73%. Experts also fear that management may adjust annual profit forecasts, after which quotes will come under significant pressure.

Nevertheless, the downtrend will be limited by monetary factors, as market participants hope for the start of interest rate cuts by the US Federal Reserve in September, which should help reduce pressure on the finances of American households and stimulate domestic demand.

Support and resistance

Technically, the asset has reached the lower limit of the ascending channel around 343.75 (Murrey level [4/8]), a breakdown of which will lead to an exit from the channel and a continuation of the decline to the targets of 335.94 (Murrey level [3/8]), 328.12 (Murrey level [2/8]). The key for the "bulls" is the 359.38 mark (Murrey level [6/8]), supported by the central line of Bollinger Bands, the breakout of which will ensure the continuation of upward dynamics towards the targets of 375.00 (Murrey level [8/8]), 382.81 (Murrey level [ 1/8]).

Technical indicators do not give a clear signal: Bollinger Bands are reversing down and Stochastic turns up, while MACD is at the zero line, its volumes are insignificant.

Resistance levels: 359.38, 375.00, 382.81.

Support levels: 343.75, 335.94, 328.12.

Trading tips

Long positions can be opened above the 359.38 mark with targets of 375.00, 382.81 and stop-loss around 350.00. Implementation period: 5–7 days.

Short positions should be opened below the level of 343.75 with targets of 335.94, 328.12 and stop-loss around 349.00.