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Jul 26, 2018

American Express Stock Appears Set to Surge I Chart I Investopedia.

investopedia.com

American Express Stock Appears Set to Surge

Chad Shoop


American Express Company (NYSE: AXP), the global credit card giant, is set to surge higher. Shares of the charge card company have had a tough time breaking out above the $102 to $103 price level, as indicated by the red resistance line on the chart below.
This key level of resistance has been tested eight times counting the current touching point. That's an enormous amount of tests, and it proves that this is a critical level for the stock.
The length of time the resistance level stands and the amount of times it holds up are key in determining the importance of a level. Two to three tests of the area are considered a good number. More than five, and we have a critical point that is going to be a big factor for the stock, whether shares break out higher or plunge lower. Take a look:
Chart showing American Express Company (AXP) stock testing resistance
The stock tried to break out of that range on July 18, with earnings coming up on July 19 to help push it higher. However, earnings slightly disappointed, and American Express shares tumbled lower – though not for long.
Shares quickly rallied again and are now testing this critical resistance level. Soon, shares are likely to break through, and when they do, a quick 13% rally will likely take place. That's because the back-and-forth between the stock has created an ascending triangle pattern – one that gives us a specific price target once shares break out.
Chart showing American Express Company (AXP) stock in ascending triangle
Once the shares clearly break through the red resistance line, we are looking for the stock to hit $116 in quick fashion. The price target of $14 above the red line on the chart comes from the height of the ascending triangle pattern – from the red line to the start of the green line. That's roughly $14 per share. A $14 rally from current levels would be a 13% gain for the stock.
The bottom line is that American Express stock is set to break out. It may take a few more days, but eventually, this ascending triangle pattern will be broken, and shares should move rapidly from there. If the breakout is to the upside, the stock is set to rally double digits in the coming weeks.