Swing Trade Idea (AEP) – October 4, 2022
Our bullish trade for Tuesday, October 4th is American Electric Power Company Inc. (AEP). AEP is part of the Utilities Sector, which has traded lower towards a major support level, with AEP following this pattern.
AEP found support at a major support area of $88, from where we have seen some bullish reaction. As this is a counter-trend trade, we expect to see some further upside, with the next resistance around $90. Although the 1M and 6M trends are bearish, it has a relative strength of 6 (out of 10). This provides a good risk/reward bullish entry.
As a close, if AEP were to trade below $86 for multiple days, this would invalidate our analysis and focus cutting losses on the trade. We also consider cutting losses on this options trade if the value of the vertical spread moves below $1.54.
