The American multinational investment bank and financial services company headquartered in New York City, JPMorgan Chase & Co. (NYSE: JPM) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, JPM had recently formed a symmetrical triangle pattern. This pattern is shown as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Daily Chart – JPM
#2 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the daily chart, indicating a bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Above MAs: The stock is currently trading above the 50-day as well as 200-day SMA, indicating that the bulls are currently in control.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70, while Aroon Down (blue line) is below 30. This indicates possible bullishness.
#5 IH&S Pattern: The stock was forming an Inverted Head and Shoulders (IH&S) pattern.
This pattern is marked in orange color in the daily chart.
The stock has currently broken out of the IH&S pattern. This is a good support level and seems like a good area for the stock to bounce upwards.
#6 Near Support Level: The stock is currently trading above a strong support level. This level is marked as a blue dotted line. This seems like a good area for a bounceback.
#7 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. JPM had taken support at the 61.8% Fibonacci support level as seen in the weekly chart. So, this seems like a strong support area for the stock.
Weekly Chart – JPM
#7 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the weekly chart as well, indicating possible bullishness.
#8 %K above %D in Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line in the weekly chart. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of stocks at the current price of $113.61. The rest of the shares can be purchased above the price of $118.80.
TP: Our first target price is $118. If the stock closes above this level, the second target price is $128.
SL: To limit risk, place a stop loss at $110.80. Note that this stop loss is on a closing basis.
Our target potential upside is almost 4% to 13% in the next 4-6 months. For a risk of $2.81, our target rewards are $4.39 and $14.39. This is an almost 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x 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. 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 the sector.
Happy Trading!
Tara
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