Potential Reversal on Bank of America Shares – Nov 19, 2014

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Potential Reversal on Bank of America Shares - Nov 19, 2014

Potential Reversal on Bank of America Shares - Nov 19, 2014

Bank of America shares seem to have reached a top, as price is finding resistance at the $17/share area. This lines up with the previous highs and may lead to the formation of a longer-term double top pattern if price resumes its drop.

MACD is heading lower, indicating a pickup in selling pressure. RSI is also moving south, which suggests that sellers are in control of price action. In this case, Bank of America shares might drop until the next support zone at $15.50/share.

Bank of America Shares Forecast

A drop until $15.50/share could complete the formation of the double top, which would mean more losses for Bank of America shares. On the other hand, if the previous lows hold as support, price could bounce back to the previous tops once more or create a longer-term range.

Take note that price could find support at the short-term 50 SMA, which is currently around $16.80/share. After all, the 50 SMA is still moving above the 200 SMA, suggesting that the uptrend could carry on.

A pickup risk appetite could be what Bank of America shares need in order to gain more ground. However, things are looking dim for market sentiment recently, as global growth concerns have popped up and geopolitical tensions remain on the table. Price action could also find a catalyst at the release of the FOMC minutes this week, which could indicate whether the Fed is moving closer to tightening policy next year or not.

If the US central bank commits to keep rates at their current lows even as the economy improves, risk appetite could surge as it would mean a longer period of easy monetary policy and better credit conditions for US companies. This might lead to more gains for US equities, including Bank of America shares.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com