Bank of America
Bank of America (BAC - Get Report) got plenty of traders' attention yesterday, after just barely eking out a profit for the third quarter. While the earnings news had a big effect on the headlines, it's not having a huge effect on share prices. For that, the technicals are reigning right now. Back in late July, I pointed out the bullish double bottom setup in shares, recommending buying shares on a move above $8.25.
Since then, shares have climbed 14% -- but a short-term setup points to more upside in this volatile big bank.
BofA is forming a short-term ascending triangle pattern right now, formed by a horizontal resistance level at $9.70 and uptrending support below shares. Essentially, as Bank of American bounces in between those two price lines, it's getting squeezed closer and closer to a breakout above that $9.70 resistance level. When that happens, we've got a buy signal in shares.This pattern is coming at an important time for BofA: the double-bottom that we'd watched this summer reached its price target, so this ascending triangle indicates that the rally isn't over for this stock. An uptrend in RSI that's still in force adds to confidence in this trade. It means that price is still increasing at an increasing level. If you decide to be a buyer here, it's crucial to wait for $9.70 to get broken before buying.
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