Potential short set up for JPM

This is a potential set up and not yet actionable unless you want to take an aggressive starting position. JPM has finally up to pre COVID price level. The run up recently has been too fast too sharp in my opinion. RSI is extreme over bought reading. Any marginal high will extend the PPO divergent high. Be careful trading this since the earning is coming up on this Friday before the bell. I can see rejection here or making a marginal new high and fade. That would be a bull trap and down move may be pretty swift. Down side target for me is the yellow trend line from COVID March low or the top of the gap at $112.55.
Comment: On Friday, major banks including JPM, C, and WFC reported earnings. JPM didn't go down as much as the other banks yet as a major component of XLF, it got drugged down with them. Taking the stock down below the horizontal support level which further proved to be a bull trap. During the Friday's Sesson, it tried to regain the support and back tested from the below but clear rejection so far. RSI is heading down and PPO is poised to make a high level bearish crossover.
Comment: Little shy of 5% down from the high. Additional 1% down will be the top of recent gap on the daily time frame.
Comment: Clear break down from the trend line and tried to pop but rejection from the horizontal resistance. 7% down from the high, perfect back filling the recent gap. Not just JPM, I see overall weakness in XLF. As some of the key sectors weaken, it may spread into the rest of the sectors that are holing up the market.


Little shy of 5% down from the high. Additional 1% down will be the top of recent gap on the daily time frame.
I disagree, considering today alone we saw JPM make a divergence into close as it rallied into close while other banks like PNC & WFC came back down. We should see a bullish week for JPM going into earnings with a possible top out on Thursday if it were to not perform well on earnings.
TK0421 DotcomJack
@DotcomJack, Yeah, it's all possible. I am not personally taking a position right before the earning so we will see which way it will be after the earning. Solid upward break out with follow through would be bullish for the time being. I will still remain bearish despite of very strong trend.
+1 Reply
@TK0421, Best of luck!
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