Stock of the day: Wells Fargo

Stocks have finally reversed. The FED didn’t surprise nor disappoint. Stock traders are using this as a good sign to buy discounted assets. Major supports or indices were defended and you can now feel a lot of relief on the market.

In today’s analysis: Wells Fargo, where we are one small but crucial step from a major long-term buy signal. But first, let’s take a look at our piece about this instrument which we wrote back in mid-April:

“46.5 USD (green) is now the most important support. It’s the neckline of the H&S mentioned above. Last week, the price managed to use those levels as a support bouncing of it with a nice hammer candlestick pattern. As long as we stay above the green area, buyers can still have hope but should the price close a day below the green area, that would mean a very strong sell signal.”

The neckline was eventually broken and yes, that gave us a sell signal. It wasn’t too strong though or maybe it was and then the FED changed everything. After the breakout, the price managed to drop to around 42.6 USD and that was it.

Currently on the chart, we can see a very handsome bullish reversal. The one step towards the buy signal is the breakout of the neckline (green) and the mid-term down trendline (blue), which is yet to happen. Once the price closes above those two, the buy signal will be triggered.

On the other hand, a bounce from those two, could be a signal to sell. But with the current sentiment, a breakout seems more probable.