3M: A overall view3M is a company with a very significant history. Its price has been following an upward channel since at least 1962.
Let’s divide the timeline of this stock’s price into 20-year periods and look at the corrections above 40% the price has faced in the past.
1962-1984:
It seems that 3M is sensitive to rising interest rates. In these 20 years, the price corrected several times; however, only twice did the correction exceed 40%. It is worth noting that the price formed a double bottom on two occasions before reversing the trend to reach new highs.
Regarding the corrections, the one in 1970 reached the algorithmic level of 0.62, while in 1975 it reached 0.79.
1984-2004:
During the 20 years of significant economic expansion, 3M continued to trade within the upward channel, experiencing the largest correction of those 20 years during the 1987 flash crash, where it dropped by 46%. Subsequently, it only faced one significant correction in 1998, when it fell by 37%. Regarding the corrections, the one in 1987 reached the algorithmic level of 0.705, while in 1998 it exceeded 0.5 but did not reach 0.62.
2004-Today:
In the last 20 years, the stock price experienced the largest corrections in its history. First, a 57% drop in 2009, which reached the algorithmic level of 0.79, and then more recently, during the COVID crash, where the stock fell by 56%, reaching the algorithmic level of 0.62, followed by a 59% drop in October 2023, reaching the algorithmic level of 0.79. In total, since the ATH in 2018 ($217.19), the price has fallen by approximately 67%. With this decline, the price reached the lower limit of the upward channel.
Let’s now take a more detailed look at the recent decline from the ATH (2018):
After the ATH the price falls and retraces, reaching the algorithmic level of 0.705 and continuing the downtrend. Then, the price, at the lower limit of the upward channel, reacts in an order block on the 6-month time frame which is at the algorithmic level of 0.79.
After this swing low in October 2023, the price reacts with relative intensity, making an upward movement of around 97% in just over a year. This movement reaches the algorithmic level of 0.705, where there is a negative FVG on the 3-month time frame and a diagonal resistance line. It is at this level where the price is currently located.
Let's now take a closer look at the price action since the swing low and the subsequent upward movement:
When compared to the RSI, the price not only formed a bullish divergence at the October 2023 swing low but also broke the diagonal resistance line on the RSI, while it has yet to do so on the price itself. These are signs of strength. In the short-term time frame, the RSI indicates a potential need for price correction, which could suggest a correction at the beginning of 2025. Moreover, when observing the annual time frame, the price has formed a strong annual candle but reacted at the end of this year to a bearish annual order block. Anticipating the formation of the lower wick of a green annual candle for the upcoming year, the highest probability is that the price will start the year with a correction during the first three months.
Given this, how far could the price react before we can expect new expansive movements?
Expecting a potential correction to the algorithmic level of 0.5/0.62, where the price will encounter liquidity zones that could serve as support for the continuation of the upward movement.
These zones could represent a good entry point, although new analysis will be necessary if the price reaches that level. At that point, the price is expected to show an anatomical expression on a higher time frame (weekly, monthly).
