Chart Advisor: Earnings Season Kicks Off

Articles From: Investopedia
Website: Investopedia

By J.C. Parets & All Star Charts

1/ Banks React Lower

2/ Coinbase Explodes Higher

3/ Euro Hits 52-Week Highs

4/ Hogs Cut Loose

Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.

1/ Banks React Lower

With JPMorgan (JPM), Citi (C), and Wells Fargo (WFC) kicking off earnings season, all eyes were on the S&P Bank ETF (KBE) today.

After a deep decline into May, KBE has been consolidating in a tight range. And price pierced through the upper ends of the range earlier this week only for sellers to step in with authority.

Check out today’s bearish engulfing candle right at a shelf of former highs.

These candlestick patterns are considered bearish in nature—even more so when they occur at logical resistance levels.

Momentum also failed to reach overbought conditions during this week’s break to new highs, suggesting that the bears are still in control.

Based on the chart, we could see more sideways price action in KBE. If and when buyers absorb the supply at this key resistance zone, it will represent a significant bullish development for the overall stock market.

2/ Coinbase Explodes Higher

Bitcoin (BTC/USD) might remain in a tight range, but cryptocurrency stocks continue to rip higher.

Yesterday, Coinbase (COIN) soared 24.49%, marking its best single day ever! It also completed a bearish-to-bullish reversal pattern with authority:

Yesterday’s rally in COIN represents a momentum thrust (measured by the one-day rate of change in the lower pane). 

Strong directional moves such as this tend to mark the beginning or end of a trend. Since COIN has carved out a bottom for the past year and has now resolved higher, it is possible that a new uptrend has just begun. 

It could be just a matter of time before Bitcoin follows the rest of the space toward fresh highs.

3/ Euro Hits 52-Week Highs

The euro hits fresh 52-week highs as the U.S. dollar continues to slide.

After spending most of the year consolidating in a well-defined range, the euro sliced through a critical level of overhead supply.

Notice that momentum has remained in a bullish regime, hitting overbought conditions on multiple occasions since late last year, adding conviction to the recent breakout.

The opposite is true when we look at 2022, as momentum consistently hit oversold levels on selloffs.

The current shift in momentum suggests that the bulls are steering the ship and that a new uptrend for the euro could be well underway.

4/ Hogs Cut Loose

Lean hog futures haven’t enjoyed much of a rally as cattle have exploded to the upside this year.

In fact, the ziggy piggies are trading below their year-to-date highs. But perhaps it’s their turn to have some fun.

Check out the August contract breaking above a well-defined polarity zone at $94.50:

That level acted as support last fall and then flipped to resistance earlier this year. Bulls are now defending that same level from below after a recent overbought reading on the 14-day relative strength index (RSI).

As long as lean hogs hold above that level, the path of least resistance points toward the former contract highs and another potential rip-roaring rally in commodity markets.

Originally posted 14th July 2023 

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