Bank of America Corp. (NYSE: NYSE:BAC) opened lower on Thursday
The banking sector, like many sectors, has been negatively affected by soaring inflation and rising interest rates.
When interest rates rise, it costs more for banks to borrow money from the Federal Reserve, which can squeeze profits. When interest rates rise there are also fewer borrowers, which means less business for banks.
Last week, the Fed raised the benchmark interest rate by another 0.75% after hiking rates by that same amount in June and July. The news caused Bank of America to dive 3.38% on Sept. 21 and decline an additional 8% over the four trading days that followed.
On Wednesday, Bank of America bounced up in tandem with the general markets, which was the most likely scenario because both Bank of America and the SPDR S&P 500 had reached oversold territory on the daily chart.
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The Bank of America Chart: When Bank of America bounced up on Wednesday, the stock was unable to break up above Tuesday’s range. This settled Bank of America into an inside bar pattern on the daily chart.
- On Thursday, Bank of America opened lower but within Wednesday’s trading range, which has caused a double inside bar pattern to print. The pattern leans bearish in this cause because Bank of America was trading lower before forming the pattern but traders can watch for the stock to break up or down from Tuesday’s mother bard to gauge the future direction.
- If Bank of America holds above Tuesday and Wednesday’s low-of-day price, the stock will print a triple bottom pattern at the $30 mark. A double or triple bottom pattern is considered to be bullish.
- Bank of America has resistance above at $31.64 and $32.77 and support below at $30.40 and $29.65.
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