East West Bancorp, Inc. (EWBC) Topping Out?

East West Bancorp, Inc. (EWBC) is a bank holding company, which engages in the provision of financial services. It operates through the following business segments: Consumer and Business Banking, Commercial Banking, and Other.

Take a look at the 1-year chart of EWBC below with added notations…

EWBC had been rallying persistently since last September’s low, but has since settled in on top of a $70 support (green). The stock looks as if it may be on its way back down to that level once again, and a break of $70 would most likely mean much lower prices for EWBC.

A trader could enter a long position at or around $70 with a stop placed under the level. If the stock were to break below the support, a short position could be entered instead.

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!

Good luck!

Christian Tharp, CMT