American Electric Power Is Correcting Now but Its Pattern Remains Bullish

 | Jul 09, 2018 | 3:52 PM EDT
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American Electric Power Co. (AEP) is down sharply today but the longer-term pattern is still bullish. Let's look at the charts and indicators for AEP to where or when we might want to approach the long side.

In this daily bar chart of AEP, below, we can see that prices rallied straight up from $63 in early June to short of $72 last week. The pullback today may be been overdue in some ways. Last week AEP closed above the flattening 200-day moving average line and today it is back below it. AEP is still above the rising 50-day average line. The daily On-Balance-Volume (OBV) line is positive and the Moving Average Convergence Divergence (MACD) oscillator is starting to narrow towards a take profits sell signal.

In this weekly bar chart of AEP, below, we can see an uptrend over the past three years. Last week prices closed above the declining 40-week moving average line but right now it is back below that indicator. The weekly OBV line has been mostly positive for the past three years. The weekly MACD oscillator crossed last week to the upside from below the zero line for a cover shorts buy signal.

In this Point and Figure chart of AEP, below, we can see a potential upside price target of $88.55 and that there is likely a fair amount of support below the market.

Bottom line: In the short run AEP is correcting lower. I would anticipate buyers returning in the $68-$67 area but would wait for new highs before buying.

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