- In a note published on Monday, Bank of America listed three stocks to buy on bullish technical breakouts.
- The stocks are on the verge or have already moved above a key resistance level, signalling that more upside is to come.
- The two stocks that already broke above resistance and should see continued upside are Apple and Nintendo, while Amgen is on watch for a potential breakout.
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Bank of America highlighted in a note published on Monday three stocks to buy based on bullish technical breakouts, which occur when a stock moves above a key resistance level.
The stocks follow an ascending triangle breakout pattern, which is just one technical chart pattern that technical analysts and traders use to determine when to buy a stock.
An ascending triangle is a bullish continuation pattern and one of three triangle patterns used in technical analysis.
The trading setup is usually found in an uptrend, formed when a stock makes higher lows, and meets resistance at the same price level.
Rising support and horizontal resistance ultimately converge at the breakout level.
This pattern creates a well-defined setup for traders. If the stock breaks above horizontal resistance, traders will buy the stock, and set a stop loss order usually just below the prior resistance level.
The ascending triangle is one of seven popular bullish chart patterns that traders use to help determine when to buy a stock.
The three stocks Bank of America highlighted in the note are Amgen,Apple, and Nintendo. Apple and Nintendo have broken out, confirming the bullish buy signal, while Amgen is on watch for a potential bullish breakout.
Bank of America said: “Amgen is building a 2020 base or bullish consolidation within the stock’s long-term uptrend. Support at the weekly moving averages near 226-221 down to chart support near 210 has held, keeping this bullish setup in place. The relative chart for Amgen vs the S&P 500 is holding key uptrend support from 2019, which is a bullish sign. A decisive push above 245 would complete the base and favour upside to 277-280 (measured move) with 307 (pattern count) not ruled out.”
Potential upside from current levels: 20% to $US280 and 30% to $US307
Bank of America said: “Apple remains a leadership stock with new absolute and relative price highs. Holding key chart supports between 327.85 and 304-302, especially the prior 2020 peak at 327.85, would maintain a bullish trend with upside potential to a measured move at 398-400 next.”
Potential upside from current levels: 10%
Bank of America said: “Nintendo has a long-term bullish pattern with a big base breakout in mid 2017. The 2018 and 2019 corrections held near the rising 200-week moving average to keep the long-term pattern bullish. The stock is breaking out from a 2-year base or bullish consolidation within its longer-term upside and sustaining the move above 47,000-47,270 would keep this breakout in place with upside potential to pattern counts at 62,150 and 67,300. Key supports are at the breakout point at 47,270-47,000 and chart levels near 45,340 to 43,100.”
Potential upside from current levels:
26% to 37%