Stock of the day: JP Morgan

On Wednesday, we’re coming back to the banking sector with an analysis of banking hegemon – J.P. Morgan. The last time we analysed this instrument was in mid-November and we were looking at the very promising bullish pattern – wedge. We said:

“And actually, this wedge is one of the reasons why we’re meeting here today. This wedge can be a very promising sign for buyers if we see the breakout of its upper line. So far, it’s a bit too early to say if we’ll have another upswing, but a breakout to the upside will significantly raise those chances.”

One important lesson that came out of this analysis and what happened later was that you don’t take formation for granted until you see a breakout! We mention breakouts on purpose. As long as the price is inside the formation, there’s no signal. In that case, in order to get the buy signal, we’re supposed to have the breakout of the upper line of the wedge first. That didn’t happen and the price fell.

Currently, we’re waiting for the breakout again! The price created a head and shoulders pattern (yellow) and we’re currently on its neckline (red). The neckline is not the only support we see. Apart from that, we have the lower and the upper line of the triangle. Yes, they’re in the same place now!

The price of around 156 USD is an absolutely crucial support right now. As long as we stay above, buyers can still have hope. On the other hand, the price closing a day below those supports will bring us a proper, long-term sell signal