The article discusses the performance of Bank of America Corp. ($BAC) using Elliott Wave Theory. A rally from the low on August 05, 2024, formed a 5-wave impulse pattern, concluding on January 16, 2025.
From the analysis dated March 04, 2025, $BAC completed this cycle and entered a pullback, anticipated to unfold in 7 swings. Key support was expected between $41.79 and $38.58, reflecting a correction pattern.
As of March 16, 2025, $BAC reacted as forecasted, bouncing after finding support in the designated area. Traders are advised to prepare for risk-free positions while monitoring for any corrective movements.
Elliott Wave Analysis In Action
What we observe in this case is a textbook example of an Elliott Wave impulse followed by a corrective phase. The five-wave rally leading up to mid-January suggests a completed bullish cycle, which sets the stage for the necessary pullback. Once this structure is fulfilled, prices typically retrace in a corrective sequence before any potential continuation of the trend. These corrections do not unfold randomly but rather follow defined structures, often in three or seven swings, reflecting the natural ebb and flow of market psychology.
The measured response from the stock since early March aligns with expectations. The support zone between $41.79 and $38.58 was projected as an area that would attract buyers, and indeed, the anticipated bounce has materialised. This serves as confirmation that the correction is progressing within an identifiable framework. With the price now showing signs of stabilisation, attention shifts to managing exposure effectively.
During this phase, it is key to distinguish between a simple relief rally and the start of a new impulse. If further corrective movements develop, maintaining a defensive stance remains sensible. The best course of action is to let the structure unfold while securing positions against unnecessary risk.
Importance Of Patience In Trading
At this point, discipline is what separates those who succeed from those who react impulsively. Patience in awaiting the completion of corrections before committing to a position ensures traders are not caught in premature entries. Close tracking of price action within this range will help confirm whether a further leg lower remains possible or if a next leg higher is already developing.
