Stock of the day: Wells Fargo
15 March 2023
The ongoing turmoil in the banking sector has led to drops in share prices, and today's biggest hit was taken by Credit Suisse. With uncertainty looming, it's worth taking a closer look at Wells Fargo and its potential vulnerability.
Looking at the weekly chart, we can see that Wells Fargo has been trading within a large flag formation (black) for the past few months. Flags are trend continuation patterns, and in this case, the previous trend was bearish, suggesting a possible breakout to the downside. That's exactly what we saw this week, as WFC's stock plummeted.
At the moment, the stock is hovering around the yellow horizontal support, which was created by the lows from 2022. However, further stress on the banking sector could push prices even lower. My current view on WFC is pessimistic, and I anticipate that we may reach the blue support soon. This level was a key support in 2020 and the beginning of 2021