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Today, we’re recommending a new bullish trade on Bank of Montreal (BMO) following earnings on Wednesday. The company earned about $740 million (in U.S. dollars), down year-over-year but beating analyst estimates. Bank of Montreal also announced plans to lay off workers in a greater emphasis on digital channels, and raised its dividend.

Oil prices may not get much above $50, but stability is becoming a higher likelihood. In addition to rising interest rates in the United States, stable oil prices should support the stock’s “pennant” breakout Wednesday, because of a healthier energy sector, and send the price past recent highs.

We like this BMO call position as a way to increase our bullish exposure. However, we recommend watching the trade very carefully as the S&P 500 reaches resistance.

‘Buy to open’ the BMO July 65 Calls (BMO160715C00065000) for a maximum price of $1.50.

You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.

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