There’s a buying opportunity in this big U.S. bank, according to the charts
When looking through charts, I tend to focus on strength and look for potential movers or stocks that just have broken out. This week, I took a different approach and found a giant that is seemingly on the ropes but looks ready to fight back – JPMorgan Chase (JPM) . It’s no secret that the financial sector has been the worst performing sector year to date. The State Street Financial Sector ETF (XLF) is down 5.3% for 2026. Now the financials face the possibility of rising rates. From a fundamental perspective, it’s not the ideal scenario to jump into. However, when others are fearful, they may not see the opportunity or have the stomach to pull the trigger to buy into that weakness. This is where the charts come in handy. JPM is now at key levels where we have a more clear and definable risk/reward opportunity. When looking at the charts on multiple time frames we’re at a measurable risk level and think it might be an opportune time to get involved now. The setup: Short term First, we examine the one-year daily chart. I’ll admit this is not the best-looking chart. We have major resistance just above $320 and what appears to be a rounded topping formation. However, we are returning to our longer-term uptrend and critical anchored volume weighted price (AVWAP) levels which go back to last April’s reversal low and the May gap that helped ignite the rally. These AVWAP levels are considered strong areas of interest and good support areas to add to a position. The setup: Long-term I was always taught – when in doubt, back it out. So here we look at the same chart going back five years on a weekly basis and we see a strong uptrend being tested. That key level we are watching in the one-year daily chart coincides with the weekly chart as well. This is our observable and measured risk level. Then there’s momentum. The RSI on both time frames shows a bullish divergence. Meaning as price made a new low, its momentum did not. On the daily chart the RSI also triggered a buy signal as it moved from an oversold condition under a 30 reading back into its more normalized range. Traders, myself included, use this as a trigger to buy and yesterday’s rally may be the turning point needed. Relative strength Before I get to the trade, let’s look at the company’s primary peers – Morgan Stanley, Goldman Sachs and Citigroup. Both Morgan Stanley and Goldman made new all-time highs Wednesday, while Citi held a key support level and is the best performer of the group over the last 52 weeks and seems poised to rally back to its highs as well. Relative to its peers, JPM is lagging, but it is in position to play catch-up. The trade We have clearly identified the risk. Support is being tested and buying at current levels seems quite prudent. If shares were to break below $280 then the major trend is broken. Set your stops under that threshold and revisit the trade. However, realistic minimal upside targets up to $320 should be met rather quickly. If shares are to break above that resistance level look for an attack on the all-time highs of $337.25 which should set us up for another long-term move higher. While financials may be facing some headwinds in a rising rate environment, the big banks seem to be shrugging that off and are starting to outperform. If this uptrend continues, JPM and its current $810 billion market cap could join that exclusive $1 trillion club over the next 12 months. Jay Woods, CMT with Chase Games DISCLOSURES: Woods owns JPM stock. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
