Although Wells Fargo's (WFC) balance sheet has a few murky areas, this big bank is showing up on our list as an attractive technical trade. Since the start of March, shares of WFC have been consolidating sideways, trading in a range between resistance at $34.60 and support at $32. That's setting up an ideal "if/then trade" for us this week.
Put simply, an if/then trade is a sideways setup whose direction is contingent on which way shares of WFC break out of their channel. It works like this: If shares of WFC break out above $34.60, then traders have a buy signal. Otherwise, if WFC breaks down below support at $32, then this giant bank becomes a short candidate.
Momentum, as measured by 14-day RSI, has been downtrending for the last couple of months, a factor that gives this setup a little bit of downside bias. Still, the fact that RSI is in neutral territory right now means that shares have plenty of room to move in either direction once the break outside of the channel happens.Either way this trade pans out, I'd strongly recommend waiting for WFC to exit the channel before putting your money on the line. Wells Fargo shows up on recent lists of 10 Stocks That Fidelity Funds Are Buying and 5 Large-Cap Bank Stock Buy From Guggenheim.
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