Technical Analyst, Saxo Bank
Summary: ABN AMRO and ING Group hit by heavy selling after SVB Financials news being trouble. But both banks have looked toppish for some time. AEX 25 still holding up above key support at around 735.
ING Group is testing support at around 12,34 after gapping lower this morning. The selling pressure comes after SVB Financial in US is in trouble. However, the chart on ING has warned about a top and reversal for the past week or so.
Divergence on RSI (see explanation at the bottom of this article) has been warning of potential uptrend exhaustion and the Evening Doji top and reversal pattern (circled) strong indicated a peak was in place.
At the time of writing RSI is below 40 i.e., in negative sentiment. A close below will confirm downtrend in ING.
Key support at around 12. A close below will further add to the bearish scenario with downside potential to around 11. .
For ING to resume uptrend a close above 13.50 is needed. First indication of this to occur would be if ING can close the gap created this morning i.e., a close above 13.04 is needed.
RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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