Stock of the day: Goldman Sachs

Thursday started with a bounce attempt and ended with a drop again. Friday also starts with a bounce attempt and… we’re yet to see how it will end.

Possible signs of hope can be seen on Goldman Sachs, despite the fact that yesterday the price managed to set new, long-term lows, below the 300 USD.

The whole bullish idea is tricky, but there are chances for success. Goldman Sachs was in a long-term downtrend, which most recently looks locked inside of a wedge pattern (black). That wedge could be considered a correction of a much bigger up trend which has lasted for the past few years.

Yesterday, the price broke the lower line of the wedge, which in theory should be considered a very strong sell signal. So why are we so optimistic? It could be a false breakout (blue), because at the end of the day, the price managed to reverse.

If the positive sentiment holds today, we may see the price coming back inside of the wedge. That comeback would confirm the false breakout and, in theory, give us a strong buy signal. Friday will be crucial, so today’s session will definitely give us answers. The price closing a day below the wedge will be a signal to sell and the price coming back inside of the wedge will be a signal to buy.