Market Analysis of American Express
The chart for American Express (AXP) looked quite encouraging in early July, showing a solid upward trend since the lows seen in early April. However, over the last month, things have taken a turn. It appears the stock is forming a typical double-top pattern. Right now, AXP is testing important support levels, and some weaknesses have become apparent in August.
The daily chart clearly illustrates the double-top formation, with peaks marked around $328 in early July and approximately $325 in February. This pattern became clear only after the second peak led to a pullback, resulting in a notable decline for AXP. Currently, the stock is down roughly 11% from its July high and is also testing its key moving average support.
Back in mid-July, American Express had a moment of recovery when it bounced off the 50-day moving average, providing a brief respite from the downward trend. But after that small rebound, sellers regained control, pushing the stock down to the 200-day moving average. There was a hammer candle at the start of August that suggested a near-term bounce might be possible, but caution is warranted—breakdowns could still be on the horizon.
A quick look at volume trends indicates that AXP has entered a confirmed distribution phase. The red histogram showing selling volume in recent days hints at an increasing number of sellers. Additionally, the Chaikin Money Flow (CMF) at the bottom panel reflects these trends. Given the strong decline we’ve observed recently, it’s not surprising to see the CMF dipping below zero, pointing to ongoing distribution. Unless the CMF rises above that crucial zero mark, the chart suggests we might see more selling pressure in the future.
Diving deeper into the daily charts, it’s interesting to note that the 200-day moving average aligns with a 38.2% Fibonacci retracement level based on the rally from April to July. This alignment signals a potential key support juncture. If AXP breaks below $287, it could indicate a continuation of the downtrend.
Regarding potential downside targets, the Fibonacci levels provide additional insights. The 50% retracement level, around $275, might act as secondary support, but there’s also a possibility of heading towards about $262, which represents a 61.8% retracement of the spring rally, reflecting a potential 20% decline from July’s peak.
If AXP can bounce back from the 200-day moving average, it will look to reclaim levels above $305 to reject further bearish sentiments. Should the company regain its 50-day moving average while boosting its volume and momentum, that could open the door for more upward movement in the weeks ahead. For now, however, the technical indicators appear to lean more towards weakness than strength.
