Breakout is Near, What Are Investors Missing?

Capital One Financial Corporation (NYSE: COF) reported its third-quarter financial reports. The company made a net revenue increase of 4% which accounted for $9.4 Billion. Along with that, the firm managed to have a 1% decrease in operating expenses as compared to the last quarter of this year.

Moreover, this decrease further helped set up a lower efficiency ratio of 51.8%, indicating the firm’s non-interest expenses upon its revenue. During this quarter, the average loans of credit cards increased to $5.3 Billion. At last, the net interest margin (NIM) for Capital One was reported as 6.69%

Previous Price Action of COF Stock

The COF stock price started falling after the bullish rally of October 2020 and ended in August 2021 with a high of $177. The bears took control on this level, which pushed the price towards a bearish trend.

However, when the bulls hit the level of $87, this bearish trend stopped as the price-to-earnings ratio turned cheap, attracting investors. The bulls are not able to reverse the trend yet and the trend has changed to a consolidation.

Technical Analysis and Prediction of the COF Stock Price

As of now, the COF stock price is currently trading at a support level of $97.74. The bulls have successfully reclaimed the support level of $87.5. The immediate resistance level from this point is positioned at $106, while the second resistance level is located at $116.

Too Good Too Soon for COF Stock

As the stock took off from its resistance, the RSI also rose from its over-sold level of 30. The RSI also made a bullish crossover with its simple moving average line (SMA), which is an indication of bullish strength. This has also created a massive gap between them.

The prediction for the COF stock price will be bearish in the short term. The target for the bulls was the first resistance after reclaiming the support level but the 50 EMA is acting as a resistance as per the Friday candle. However, the strength index graph shows a significant gap between the RSI and its SMA which will result in a price correction.

Conclusion

Capital One Financial Corporation (NYSE: COF) stock has been in a sideways trend for 52 weeks now. The company has just released its quarterly reports and the investors are pleased after seeing the fundamental performance. At the press time, COF stock price rose from its support level but the prediction is bearish.

Technical Levels

Support Levels: $87 and $71
Resistance Levels: $106 and $116

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks or related indexes comes with a risk of financial loss.