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TheWaveTrading

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JPM: En Fuego

  • JPM is the strongest bank among its peers
  • So far it does not have a sequence of lower lows
  • Today a massive reversal pattern should open the door to at least a Fibonacci retracement of the decline from the June 2015 lower high

Monthly time frame:

  • Negative sign: Breakout failure (Above the 2000 ATH)
  • Positive sign: It has not established a lower low (Below the October 2015 low) hence the long-term trend is not down
  • EW wise I am clueless.

JPM Monthly Chart
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Weekly time frame:

  • We have an impressive reversal candlestick, which is suggesting more follow through to the upside in the days ahead
  • The first hurdle is located at a weekly gap at 57.76 then we have R1 = 58.53; R2=59.70 and R3= 60.72
  • If R2 is reclaimed then odds should favor at least the 0.5 retracement of the decline from the November lower high, which coincides with R3 = 60.72; The 0.618 retracement is at 62.72

JPM Weekly Chart
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Daily time frame:

  • We have a massive Island Reversal (With a huge gap). This reversal pattern usually occurs at major bottoms.
  • Next Tuesday JPM has to prove to be so strong by not losing the 10 dma = 56.80
  • The immediate resistance is located at the gap = 57.76
  • By closing the gap JPM would breach the upper trend line of the channel that has been formed from the June 2015 high.
  • If JPM does not fail at the R2=59.66, probably the next target should be located at the declining 50 dma which today stands at 61.35

JPM Daily Chart
Larger Image

  • If we zoom in at the price action from the end of January we can see that JPM has most likely formed a Triangle. Yesterday's down leg has been a shallow thrust that should have completed an EW pattern.
  • Hence the Triangle in addition to the Island Reversal are compelling bullish reasons.

JPM Daily Zoom Chart
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  • Daily oscillators are aligned with higher prices ahead: The RSI has a positive divergence in addition to breaching the trend line resistance from the November high and the MACD has a new bullish signal cross

JPM Daily Momentum Chart
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  • Lastly it is quite impressive the outperformance of JPM versus KBE (Bank ETF) since October 2015. It is also impressive that from January in spite of the broad base market weakness the JPM relative strength has accelerated.

JPM versus BKR Daily Chart

 

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