CHART ANALYSIS

Downside Possibility For J.P. Morgan Chase & Co.

06/29/04 10:18:08 AM

by Gary Grosschadl

J.P. Morgan Chase & Co. (JPM) hits a previous congestion zone which now looks to become significant resistance.

Security: JPM (NYSE)
Position: Sell

Last May JPM reversed its downward slide and began rising until it hit a congestion zone. This zone, in the $38 area, is the same place where the stock stalled in the latter part of April. It also relates to the classic Fibonacci level of 38.2%.

The previous April stall ended with a harami candlestick formation occuring in early June, just above $38. A harami is a two candle formation, with a small candle body forming after a large bullish candlestick. The smaller, second body falls within the open and closing values of the larger candlestick. The formation portends a reversal pattern. In this instance because the small candle body is actually a doji (same open and close, resulting in a cross shape), the pattern is called a harami cross.

Daily chart for J.P.Morgan.

Graphic provided by: Stockcharts.com.

Another candlestick pattern also hints at a balk near $38. Two shooting star candlesticks (small bodies with long upper shadows) have formed, and the two together form a possible tweezer top (two matching tops that often look like tweezers). This hints at a likely reversal.

Several indicators are worth noting. The ADX at the top of the chart is less than 20, indicating a weak trend. This trend strength component hints at a likely stall. The RSI (relative strength indicator) looks like a double top while the stochastics is showing signs of early failure as the top is starting to hinge.

Should a reversal be in the cards, a target zone is suggested in the form of a previous gap area from $36 to 36.40. Previous gaps are often filled, and in doing so become common areas of support and resistance.

Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.


Website:	www.whatsonsale.ca/financial.html
E-mail address:	gwg7@sympatico.ca

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CHART ANALYSIS

Downside Possibility For J.P. Morgan Chase & Co.

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