Capital One Financial Corp. operates as a financial holding company, which engages in the provision of financial products and services. It operates through the following segments: Credit Card, Consumer Banking, and Commercial Banking.
Take a look at the 1-year chart of Capital One (NYSE: COF) below with my added notations:
COF has formed an up-channel chart pattern over the past several weeks. A channel is formed through the combination of a trend line support that runs parallel to a trend line resistance. When it comes to channels, any (3) points can start the pattern, but it truly takes a 4th or more to confirm it.
The Tale of the Tape: COF seems to have formed an up-channel. A long opportunity could be entered on a pullback to the channel support, which at this point seems to be around $40. Short trades could be entered at channel resistance or if COF were to break below the channel support.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT