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Stock Watch

Chart of the week – Bank of America potential bullish impulsive structure continues to unfold

Chart of the week – Bank of America 

Bank of America potential bullish impulsive structure continues to unfold

(Medium-term technical analysis)

Time stamped: 10 Oct 2021 at 1:30pm SGT Source: CMC Markets (click to enlarge chart)

  • Bank of America (BAC) will release its Q3 earnings results on this Thursday, 14 October before the US session opens. Based on analysts’ consensus data compiled from TradingView, Q3 earnings per share (EPS) is expected to come in at $0.71 above $0.51 recorded a year ago and in the previous two quarters (Q1 & Q2), BAC has managed to beat their respective earnings forecasts.
  • Let’s us now take a deep dive to analyse BAC from a technical analysis perspective. Overall, the major uptrend phase in place since 23 March low of 17.95 remains intact despite a recent three-month correction/consolidation phase that has taken place from 3 June to 20 September with a maximum drawdown of -15.9%.
  • Recent prices as seen from 24 September has staged a bullish breakout from the aforementioned consolidation phase and printed a four-month high based on last Friday, 8 October closing price of 44.34.
  • The daily RSI oscillator of BAC has continued to exhibit positive configuration and still has room for further potential manoeuvre to the upside before it reaches an extreme overbought level of 75%. These observations suggest that medium-term upside momentum remains intact.
  • Overall, such positive elements suggest BAC may continue to see further potential upside as its medium-term uptrend phase starts to unfold. If 42.20 key medium-term pivotal support holds, BAC is likely to shape a further potential impulsive up leg towards the next resistance at 48.50 (1.618 Fibonacci expansion of the recent up move from 19 July low to 26 August high projected from 20 September low)
  • However, a daily close below 42.20 put the bullish tone on hold for a choppy decline to retest a key longer-term support at 38.35, also the 23.6% Fibonacci retracement of the entire major uptrend phase from 23 March 2020 low to 7 October 2021 high and the 200-day moving average.