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American Express - What the Charts Say

American Express is rallying on earnings but not in a convincing manner. Here's what the charts say to do with the stock.

Shares of American Express  (AXP)  were rallying on Friday, up 2.5%, but the stock is having trouble maintaining altitude with shares slipping from the post-earnings open.

American Express stock opened at $136.36, topped out at just over $138 and has since pulled back to sub-$135. On the plus side, shares are still higher by 2.5% while the broader market struggles amid more coronavirus concerns.

Even after a top- and bottom-line earnings beat, a fade from Friday’s highs shouldn’t be that unexpected. The stock has been on fire and remains overbought from a technical perspective. Others, like Visa  (V)  and Mastercard  (MA) , are in a similar situation, although both have yet to report earnings.

On the plus side though, traders now have a range to trade in American Express. Let’s look at the charts.

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Trading American Express Stock

Daily chart of American Express stock.

Daily chart of American Express stock.

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A look at the chart shows just how strong this stock has been. American Express shares hit a low of $114.25 in early December. After Friday’s high, it marked a run of roughly 21% in less than two months.

For investors, it’s hard to be disappointed with that kind of reaction, even though the stock’s post-earnings move is somewhat disheartening. In any regard, where to from here?

With American Express fading on Friday, I want to first see if it will fill its post-earnings gap back down to the $132 area. Ahead of earnings, AXP shares were trading between $132 and $130. If prior resistance at $132 acts as support, it will show that bulls remain in control. However, a move below $132 puts $130 on the table, along with the 20-day moving average.

If that fails as support, look for a drop into the $126 to $128 area, which marked a solid breakout zone for the stock. Below that and the 50-day moving average is in play.

On the upside, bulls need to see American Express take out Friday’s open and eventually reclaim the post-earnings high. Over $138 and $140-plus is on the table.

Here’s the bottom line: Look to see if Amex stock can stabilize above $132. If it can, $138-plus is possible. Below opens up several support layers, the most notable of which comes into play between $126 and $128.