BAC extended the rebound off the 5.13 YTD low (04 Oct) to break above the 7-month bear trendline (off 13.86/11.25/10.96 highs). The RSI divergence (from 6.31/5.13 lows) suggests continued strength higher. There is scope for bulls to target 8.80 (Resistance 1). An upside breakout there would signal a base in place and initiate the next upleg towards a series of lower highs starting from 10.05 (01 Aug high) (Resistance 2) then 10.28 (21 Jul) (Resistance 3) which guards 10.96 (07 Jul high) near the 10.91 key reaction low (30 Nov 2010) (Resistance 4).
However, failure to reclaim 8.80 would delay and re-open 6.90 (Support 1). A clean loss would expose 6.03 (Support 2). A breakdown there would form a potential swing high and risk a deeper setback towards the key 5.13 low (Support 3) for a retest.
Trading Indication:
Short-term (or Intraday): Buy at 7.15 or lower;
Target at 8.80 and higher;
Stop Loss at 7.05 (1.4%)
Long-term: Possibly sell higher
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