Pattern Play: Bank of America

Downside breakout from a symmetrical triangle.

Downtrend 6

Bank of America (BAC), the financial institution, gapped to the downside of a symmetrical triangle pattern on Monday, September 21st. A symmetrical triangle is considered to be a continuation pattern and before price began to form the symmetrical triangle back in mid-March, price was in a steep short-term downtrend. The RSI is currently sitting around 33 and shows downside momentum. Yesterday's price action created a long legged doji candle stick, which could be signaling a possible reversal as it appeared at the bottom of a short-term downtrend. If today's price action does not get below the doji candle, it could mean that price is getting ready to pullback. If price turns up, traders should watch the lower trendline around the 25.50 level for resistance. If price can hold below the resistance area, then price will likely continue downward and reach for 22.50 again. If price breaks below 22.50, it could continue falling towards 20.25. On the other hand, if price cannot be stopped at the 25.50 level or the lower trendline, price could potentially pop back up and head for 27.50. If this occurs it would mean that the breakout from symmetrical triangle pattern failed and traders could look to play the upside.              

Source: GAIN Capital, TradingView

Build your confidence risk free

More from Technical Analysis

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.