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

More from Technical Analysis

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.