On the daily chart, we see that the November rally confirmed a break past diagonal resistance that took place in October. In the meantime, and as a result of the last few weeks of sideways consolidation, the intermediate term moving averages (yellow 50-day, blue 100-day and red 200-day) are getting a chance to play a little catch-up with price — and that’s a healthy thing.
Ultimately, one of these three moving averages will likely need to be tested as support for BAC stock to be a better buy again. That is to say, should BofA drop following this Friday’s report, traders would need to watch how shares react at any of these three averages.
Any strong bullish reversals off one of these three MAs could set up the next good buying opportunity.
Alternatively, should BAC stock rally and break out of the recent multiweek consolidation phase following the earnings report, quicker traders could look to hop on board and see if momentum could sustain for a next upside target toward $25-$26.
The highest-probability trade following earnings, in my opinion, would set up if BAC stock were to rally but then quickly stall and reverse lower. Such a scenario would allow traders to enter short-side trades betting that the stock will mean revert lower toward the $20 area as a first downside target.
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