The bullish sentiment for Bank of America (US: BAC) came to a halt in January when the stock entered a truncated mode below 36.00. However, based on the technical and wave analyses, the stock may exhibit a bullish rebound after a series of corrections.

1. The Elliott wave count suggests that the stock has completed its 5-wave impulse minute phase and current wave analysis indicates that the stock is in a zig-zag correction mode, with 3 waves completed out of 5 for ((a)) wave.
2. Candlestick price action indicates a clear bullish rebound after the formation of the bullish hammer on Wednesday when it invalidated the previous strong bearish candle.
3. The bullish hammer closes above 88.6% of the Fibonacci level and demand level.
4. The bullish hammer closes above 238.2% of the expansion level of wave (i)-(ii). This will signify a (iv) wave is underway.
5. The Relative Strength Index (RSI) shows a clear bullish divergence and the indicator also suggest that the stock is currently oversold especially when the divergence happened below the 40 oversold line.

*Should the demand level be invalidated, we might see the price fall towards the 26.00 regions.

CHART LEGENDS

Relative Strength Index

Red line = 60 Overbought Line

Green line = 40 Oversold Line