BANK OF AMERICA CORP.: THE LIKELY CORRECTION OF
| Scenario | |
|---|---|
| Timeframe | Weekly |
| Recommendation | SELL STOP |
| Entry Point | 37.95 |
| Take Profit | 35.10 |
| Stop Loss | 40.00 |
| Key Levels | 35.10, 38.00, 39.70, 42.70 |
| Alternative scenario | |
|---|---|
| Recommendation | BUY STOP |
| Entry Point | 39.75 |
| Take Profit | 42.70 |
| Stop Loss | 39.00 |
| Key Levels | 35.10, 38.00, 39.70, 42.70 |
Current trend
Shares of Bank of America Corp., one of the largest banks and analytical agencies in the United States, are adjusting at 39.00.
More and more experts are inclined to believe that the transition to the "dovish" course of the US Federal Reserve's monetary policy at the September 18 meeting will have a negative impact on the banking sector, since the adjustment of borrowing costs will put pressure on investment banking, changing net interest income (NII). Against this background, a decrease in the number of new deposits is predicted, which, in turn, will provoke an increase in expenses.
Yesterday it became known that Berkshire Hathaway Inc., one of the largest shareholders of Bank of America Corp., sold more than 6.0 million securities with a total amount of 228.7 million dollars from September 6 to September 11. Despite the liquidation of part of the stake, the holding still keeps more than 800.0 million shares in its portfolio.
The financial report for the third quarter will be published on October 15: analysts expect revenue of 25.55 billion dollars, above 25.40 billion dollars in the second quarter. Earnings per share (EPS) due to the projected decrease in NII may amount to 0.8078 dollars, which is slightly lower than 0.8300 dollars previously.
Support and resistance
On the D1 chart, the asset is trading below the support line of the ascending channel with the boundaries of 42.50–39.80.
Technical indicators reversed and issued a new sell signal, expecting a continuation of the decline: the range of EMAs fluctuations on the Alligator indicator is expanding in the direction of decline, and fast EMAs are below the signal line, while the AO histogram has moved into the sales zone, forming new descending bars.
Support levels: 38.00, 35.10.
Resistance levels: 39.70, 42.70.
Trading tips
If the asset continues to decline and the price consolidates below the minimum of 38.00, one can open short positions with a target of 35.10 and a stop-loss of 40.00. Implementation period: 7 days and more.
In case of continued growth of the asset, as well as price consolidation above the maximum of 39.70, one may open long positions with a target of 42.70 and a stop-loss of 39.00.
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