JPMorgan Chase & Co. (NYSE: JPM) seems to be gearing up for a surge as per its latest charts. JPMorgan Chase & Co. operates as a financial services company worldwide. It operates in four segments: Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock had recently formed a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as purple color lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move. Currently, the stock has broken out of the symmetrical triangle pattern which is a possible bullish sign.
JPM – Daily Chart
#2 Price above MAs: The price is currently above the 50-day as well as 200-day SMA. This usually indicates a possible bullish bias for the stock.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#4 Bullish ADX and DI: The daily chart shows that the +DI line is above the -DI line. The ADX line is also starting to move higher from below the -DI and +DI lines. This is a possible bullish sign.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Flag Pattern Breakout: As seen from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrowing range. This is a classic flag pattern and is marked in the chart in pink color. A flag is a continuation pattern. Whenever a stock breaks out of this pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern, indicating bullishness.
JPM – Weekly Chart
#7 Bullish Stoch: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart, and is also moving higher from oversold levels. This is a possible bullish indication.
#8 Bullish RSI: The RSI is above 50 and moving higher, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for JPM is above the price of around $171.60.
TP: Our target prices are $180 and $185 in the next 3-6 months.
SL: To limit risk, place a stop loss below $167.00. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 5% to 8% in the next 4-6 months.
For a risk of $4.60, the target rewards are $8.40 and $13.40. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the symmetrical triangle pattern breakout level. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in its sector.
Happy Trading!
— Tara
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