Don't Ignore This Chart!

BAC Tests Support

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Bank Of America has been a top performing stock for the last 9 months. It has continually worked its way higher. Tuesday's price action marked a significant reversal as the stock is now testing horizontal support for the last three months. The SCTR is a great buying signal, but it tends to be very late on selling stocks in a strong uptrend. I prefer the Relative Strength shown in purple as a much better indicator for selling something in a strong uptrend if you are a swing trader. Today, the Relative Strength sits on a 4-month support line. This needs to hold. 


There are lots of indicators telling us to be cautious or add protection. Arthur Hill wrote a good article about MACD recently about what is noise and what is a MACD signal. Arthur Hill and The MACD

The volume was huge on Tuesday's candle so that is also a clue the trend may be changing. Two trendlines appear to meet near the current price. Failure to hold these levels would be a significant change in trend. I see lots of reasons here to be cuatious or add protection. 

Good trading,
Greg Schnell, CMT, MFTA

 
Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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