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

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