Should You Buy First Bancorp (FBP) After Golden Cross?

First BanCorp. (FBP) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, FBP's 50-day simple moving average crossed above its 200-day simple moving average, known as a "golden cross."

Considered an important signifier for a bullish breakout, a golden cross is a technical chart pattern that's formed when a stock's short-term moving average breaks above a longer-term moving average; the most common crossover involves the 50-day and the 200-day, since bigger time periods tend to form stronger breakouts.

A successful golden cross event has three stages. It first begins when a stock's price on the decline bottoms out. Then, its shorter moving average crosses above its longer moving average, triggering a positive trend reversal. The third and final phase occurs when the stock maintains its upward momentum.

A golden cross contrasts with a death cross, another widely-followed chart pattern that suggests bearish momentum could be on the horizon.

FBP has rallied 6.8% over the past four weeks, and the company is a #2 (Buy) on the Zacks Rank at the moment. This combination indicates FBP could be poised for a breakout.

The bullish case solidifies once investors consider FBP's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 1 revision higher in the past 60 days. The Zacks Consensus Estimate has increased too.

With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on FBP for more gains in the near future.

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This article originally published on Zacks Investment Research (zacks.com).

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