Shares of American Express (AXP) have been trading in a horizontal price channel for the past four months and are, once again, bouncing off pattern support and turning higher.
Price momentum and money flow indications reflect the bullish reversal, and the stock has moved back above its 50-day moving average, and center channel line resistance. It looks like it is headed for another test of upper channel resistance and a break above this level projects a retest of its all-time highs.
The stock spent the greater part of 2016 basing below resistance supplied by the 38% retracement level of its 2014 high and 2016 low. It broke above this resistance in October of last year and made a perfect measured pattern move higher, reaching its price objective in February. That high near $81.50 has acted as channel resistance and the 62% retracement level of the 2014 and 2016 range, while the $75.50 area has supplied channel support.
The channel center line at $78.50 has also been acting as internal pattern support and resistance, and the stock moved above it in Monday’s session. Last week, the relative strength index crossed above its 21 period moving average and center-line, and the vortex indicator, designed to identify early shifts in trend direction, made a bullish crossover.
Chaikin money flow is in positive territory, and the accumulation/distribution line is above its 21 period signal average. The renewed positive momentum in the stock price is being supported by renewed buying interest.
American Express is a buy at its current level using a position size that accommodates a stop-loss under the channel support line.
(This article was published on TheStreet.com this morning.)