Regions Financial Chart Speculation

Analyzing financial stocks can be helpful in determining trends in the broad market, but I also like to highlight interesting chart patterns or situations.

Regions Financial (RF) has been swinging in a tight yet relatively predictable swing trading range over the last year and neither has upside or downside momentum.  Most financial stocks provide comfortable dividends if held long-term, as well.

Here is a six-month chart of RF and I am highlighting a momentum buy divergence, as well as support below from moving averages (and a recent possible ‘stop-gunning’ price movement).

Notice the ‘sweet’ swings in price – normal oscillations.  An oscillator (RSI or Stochastic) might aid you better in calling price extremes if you’re looking to trade this stock with range-bound strategies.

I don’t normally call trade set-ups or entries (I mostly provide overall analysis and want you to use your own thoughts and methods on stocks I highlight) but I wanted to provide a little assistance on this candidate.

From a risk-reward standpoint, you have a favorable swing trade if you desire to take it.  I would place a stop a bit below $35 (a little closer to price action if you are rather conservative, but odds favor giving trades a bit of room) and a profit target around $37 (initial profit at $36.50).  This sets up around a 2:1 reward:risk (which is more attractive if you use the moving average — if so, your stop is $35.50 and your target $37 which provides a 4:1 reward:risk).

Look at longer-term views of this stock and run your own technical analysis (including trendline verification… are we bouncing off a trendline or did we just violate one?).  This could generate trade ideas for you.

This 1 1/2 year chart of RF shows possible “topping” action, so be a little cautious in executing a large position.  Keep portfolio risk parameters primary.

The volume (sell) spike indicates a possible selling climax and reversed trend (back to the upside) which we are seeing from that point (higher highs and higher lows relative to the sell climax).

Note:  Regions recently acquired AmSouth Bank, and the restructuring is currently taking place.