(Click To Enlarge Chart)
JPM presents an interesting and not too common chart pattern that could lead to a trade depending on how it develops from here. The above pattern, detailed by Thomas Bulkowski at thepatternsite.com, is a broadening bottom formation with rising volume and a developing partial decline. According to his statistics a partial decline leading to an upward breakout works 67% of the time, while a partial rise leading to a downward breakout works 80% of the time while the breakout direction is split at 53% upward. Rising volume works best for downward breakouts.
AIGs huge loss and afterhours breakdown might appear to be negative for the financials, however, an upward breakout in JPM could lead to an attempt of the all-time high at 67, while a downward breakout has a target of around 30.
Currently there is little advantage to taking a position. It would be prudent to let the pattern develop more to see which direction a breakout is likely to go.
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