Wells Fargo & Co (WFC) Stock Is Primed for a Clear Upside Price Target

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After struggling most of the year, shares of Wells Fargo & Co (NYSE:WFC) wiggled into the green because of the post-election rally over the last few weeks. While I think most large-cap banking stocks are overbought in the intermediate-term, into year-end and possibly early January, WFC stock could see further upside pressure with a well-defined upside target.

Wells Fargo & Co (WFC) Stock Is Primed for a Clear Upside Price Target

When I last discussed shares of Wells Fargo on Oct. 6, I offered that the stock increasingly looked oversold and could see a bounce against well-defined technical support. A few weeks later on Oct. 9 my initial price target of $47 was quickly reached, all the while technical support around $43.50 held like a charm.

Before looking at the charts, it is important to remember that while anything is possible, trading over the next week and a half into Dec. 31 should begin to slow down. From a risk management perspective for the prudent trader this should mean less trading, smaller trading size and more conservative expectations as far as price targets are concerned.

WFC Stock Charts

The trade setup I am laying out in today’s column is near-term and not something I am personally looking to hold past Wells Fargo’s next earnings release date on Jan. 13.

On the multi-year weekly chart, note that while WFC stock did see some marginal undershooting of the red 200-week simple moving average and the 2009 black diagonal support line in 2016, from a momentum perspective the stock lacked any real strength on the downside.

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The recent post-election rally now has the stock back at the upper end of its blue consolidation phase where I would expect the stock to take at least some sort of a pause before ultimately continuing higher. The weekly MACD oscillator at the bottom of the chart is but one signal that WFC stock is due for a pause from this angle.

However, if we zoom in on the daily chart, we see that since early November WFC stock has traded above its yellow 21-day simple moving average, which once again acted as support a few days ago.

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Traders familiar with candlesticks will note that over the last six trading days Wells Fargo stock has had five so called ‘doji’ candles, four of which showed seller exhaustion after the stock only pulled back about 6% in early December. This type of trading behavior does support the thesis of at least some further gains for the stock in the coming days or weeks. The next upside target through this lens is the early December highs around $58, while any daily close below $54 would act as a good stop-loss signal.

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