Let's look at one member of the banking industry, Bank of America (BAC). This bank was a member request a short while back.
In an environment where interest rates are expected to rise over the upcoming year, many investors are anticipating better times ahead for the banking industry as a whole. This provides for a much better outlook for the banking industry as a whole.
This summer the industry will be coming up on the 10 year anniversary of the beginning of the market crash. With some bank stocks trading at elevated prices due to the "Trump Trade" run-up, is caution warranted?
In a previous article related to the banking industry, I wrote about Goldman Sachs and pullback areas to watch for. You can access that article here "12/17/2016 - Goldman Sachs Group (GS)".
But in a time that could be favorable to the banking industry as a whole, its time to broaden the scope of coverage. This article will focus on Bank of America (BAC) and any potential trade set-ups that are developing on its charts from a technical perspective.
Bank of America (BAC) - 20 Year Chart
This first chart for Bank of America (BAC) is a 20 year candlestick chart. Since Bank of America (BAC) is on the list of newer companies being covered, it is important to see where its price has traveled over a 20 year look-back. This may be able to provide some guidance looking forward for its share price.
The Fibonacci Retracement Tool on BAC's downtrend suggests that the "easy" part of the rebound is over. The "easy" part is defined as the 38.2% Retracement or back to the $22.60 area.
The question now becomes, can BAC continue its rebound and perform a 50% or even a 61.8% retracement? With a MACD Histogram that is showing an increase in buying momentum, the odds look favorable.
BAC - Fibonacci Extension Tool
This next chart is the same 20 year monthly candlestick chart. I left the Fibonacci Retracement Tool from above and I also placed 2 different Fibonacci Extension Tools on it.
I am using the Fibonacci Extension Tools to calculate some upside price targets for BAC's current uptrend. I am also looking for confluence areas between the Target Lines of the Fibonacci Extension Tools and the Retracement Lines from the Fibonacci Retracement Tool......
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