Technician sees an ‘interesting opportunity’ to buy Goldman Sachs

There's a diamond in the rough among the beaten-down banks that's worth buying, says Evercore ISI technical analyst Rich Ross.

Goldman Sachs (NYSE: GS) is down almost 10 percent this year, but Ross says the charts are indicating that investors should still consider buying the bank even as the stock has retraced almost a third of its gains from Election Day.

The most important indicator, according to Ross, is the stock chart's 200-day moving average. While Goldman has continued to fall, the stock has still managed to remain above the trend, making the 200-day a "critical support" from which Ross sees a bounce ahead.

"I actually think that with the stock oversold and sitting on key support along with those 10-year yields that this is an interesting opportunity to enter the stock on the long side with a close protective stop around yesterday's lows near $210," Ross said.

Source: Bloomberg

Comment: The price is in a short-term downward channel and correct to levels of horizontal and diagonal support, coinciding with 200SMA and 38.2% Fibonacci retracement.

The entry options are two, the first being aggressive with deal now, and the second is conservative, with entry after the downward channel breaks up.

SL: 207.40

Alternative Scenarios: If the price moves below support levels and stays there in several successive bars, then the positive scenarios will be spoiled and we are likely to see a sharp drop in price.

Jr Trader Petar Milanov

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