This 6-month daily candlestick chart for BMO reveals that the near-term trend is up and the intermediate trend is sideways.
The most important concept in technical analysis is the trend: you always trade in the direction of the trend. The near-term trend for BMO, last three weeks, is up and is defined by the 10 day simple moving average (SMA) which is above both the 20 day and 40 day averages. The intermediate trend, last six months, is sideways with support at $58 and resistance at $62.
This brings up the another important concept in technical analysis — support and resistance. Take a look at the chart. BMO could not break $62 on three attempts over the last six months. Both the bulls and the bears have memories of this price point. BMO will meet technical resistance at $62 in this rally.
The three confirming indicators:
- Volume is relatively light which is a negative indicator.
- On Balance Volume (OBV) is trending up with the move which is good.
- Relative Strength Index (RSI) is trending up which is good.
The shaven head ( stock closed at the high for the day) white candlestick for Thursday was positive for the bulls.
Bank of Montreal was last featured on tradeonline.ca on January 7, 2011
Note: This analysis is for educational purposes so you can learn to trade online using candlestick charts. Please conduct your own analysis or consult your financial advisor before making investment decisions.
The chart snippets are from BigCharts.com which I recommend and have used for fifteen years.
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