1. The first thing that jumped to mind when viewing the chart of Wachovia was the medium-term resistance trend line (green). This nice upward trend that began on July 14^th is now slamming into the 3 and a half month bearish trendline (which is part of a year-and-a-half long bearish trend, more on that below), and now for the last week and a half has not had the strength to puncture through. This is a serious indication that the immediate upward trend is about to peter out and resume its previous downward trend. It is also interesting to notice how the medium-term trendline is applying its pressure inside the ascending triangle price formation, further hinting at its strength.
2. Many times ‘big’ whole numbers which represent a major psychological barrier can become resistance sticking points. Typically, the numbers which wield this psychological power are multiples of 5, or anything ending in a 3 or a 7 (Say, 13 or 37). As WB oscillates towards 20 the psychological resistance of this number becomes apparent: 3 times the price has stopped just short of 20 during the immediate upward trend, hinting that it may not be able to overcome the psychological duress imposed by the number 20.
3. A formation of an Ascending Triangle, which in this case the evidence leads me to believe that it is a bearish continuation pattern. As you can see, the flat top trendline has been hit 4 times (including the almost hit today), and 4 touches is more than enough to indicate a valid trendline. The bottom trendline has only had two direct touches, but the presence of so many near stops very close to the trendline (every trough other than the two direct hits) validates this trendline, and thus a descending triangle is formed. In addition to the strong trendlines, the downward volume trend acts a further confirmation of the price formation. It is also apparent that the triangle formation is nearing its end because its two trendlines are a week or so away from touching, a further indication of a breakout.
4. The volume trend is also bearish: not only does it show that the upward trend is weakening via the succession of smaller and smaller green volume bars, it also acts as a solid confirmation of the ascending triangle.
5. The Stochastics indicate that the trend is languishing in the ‘overbought’ zone. Usually, stocks in the overbought zone will not remain there for long and the price will either stall or fall shortly after becoming overbought. The presence of so much resistance above the stock and the apparent crest in the WB wave is very compelling evidence that the stock is about to take a turn downwards.
6. Wilder’s DMI (ADX) also provides some interesting evidence; it shows that the trend of WB is falling into weakness. Typically, any value over 30 on ADX indicates a pretty strong trend that has little probability of a sudden shift, but in this case the main (bold) indicator line tumbled from a very strong trend of 50 to a mere 28, a move which renders the trend susceptible to a sudden shift.

Given the amount of evidence stacked against it, it looks very probable that Wachovia could have a downward breakout in the next week: It is bumping into a strong 3 month old trendline on forcefully descending volume, which is nearly sufficient evidence in itself to place a short, but in conjunction with an ascending triangle formation on the verge of a downward breakout suggested by both strong upwards resistance and an overbought Stochastic reading, WB makes for a pretty convincing bear. To top it all off, the low ADX reading also acts as confirmation by implying that the trend is weak and liable to change.

Another good piece of evidence that WB may be on the verge of a downwards move comes from the graph of its Fibonacci Retracements. As you can see when measuring the latest price move (from 31 to 7.5), it has bounced off of the middle 50% Fibonacci line several times now, which also happens to be both the most common retracement point AND is extremely close to the above-mentioned psychological resistance of the number 20.

This is the weekly chart of the last year and a half of WB, as you can see there’s a very prominent downwards trend that WB is very close to bumping into. Also note the very high ADX rating, showing that the trend is unlikely to take a turn upwards and poke through the established long-term downwards trend.