Morgan Stanley (NYSE:MS) Looks Bullish in Long Term
Morgan Stanley (NYSE:MS) (Closed: $26.13, Up: 2.27%) has made a huge bullish pattern in the long term charts and broke out of it on May 2013. The pattern is called a Bump & Run reversal pattern, popularized by Thomas Bulkowski. It looks somewhat like a spoon.
If we connect $35.78, the October 2009 top and $31.04, the February 2011 top and extend the trendline, we can see the BRR pattern clearly. The move between these two tops would be called the Lead-in phase. The fall of $31.04 to $11.58 on October 2011 and the subsequent rally to $24.47 on February 2013 would be called the Bump phase and the next rally, the current one would be called the Run phase. The line was broken at $24 on May and for the next two months, the price has been testing this same line. The target of this pattern is the highest high, which in this case is $35.78. We can also see an Adam & Eve Double Bottom pattern breakout above $21.20 in January this year, the pattern implication of which is yet to be achieved at $30.80.
The support enjoyed by the price would remain intact till $23 breaks, where both the neckline of the BRR pattern and a big weekly channel containing the whole rally coincide. On the other hand, a closer look at the daily chart reveals another BRR pattern with the neckline at $27.10 - $27.15 for now. It actually means that we can expect further momentum above the swing high of $27.17. Resistance before that could come in the zone of $26.50 - $26.70.
Some people could say that it is actually a Head & Shoulders pattern that failed. That would actually make us more bullish as a failed pattern performs spectacularly on the opposite side.
The indicators support bullishness too. RSI is tracing the same pattern as the price – a Bum & Run reversal pattern.
One could bring this stock on dips with stoploss below $23.75 or on a move above $27.20.