Technical Analyst, Saxo Bank Group
Summary: SVB Financials difficulties spreading to rest of banking sector in Europe and US. European Banking Sector seems to form top and reversal patterns whereas US Banking Sector taking out or testing key supports. SVB share price indicated open below 2016 level
The Europe Stoxx 600 Banks sector has been hard hit this morning after bad news and heavy selling in US banks last night. The uptrend has been weakening past few weeks as indicated by the Divergence on RSI.
The Lyxor Europe Stoxx 600 Banks ETF opened more than 5% down at the key support at around 22.75 and the 55 daily Moving average. At the time of writing buyers are lifting the Sector EFT from the support.
If the Europe Stoxx 600 Banks ETF closes below 22.75 and RSI closes below 40 threshold downtrend is confirmed with a move down to support and 0.382 retracement at around 21.72-21.52 to be the likely scenario.
To get Europe Stoxx 600 Banks ETF back to bullish trend minimum requirement is a close of the gap this morning.
On weekly chart the ETF has formed a potential Bearish Engulfing top and reversal candle (unless it closes above 23.84 today Friday) testing lower steep rising trendline . A close below could pave the way for a downtrend to strong support area around 20.26-19.58. 19.58 is also the 0.618 retracement of the uptrend.
To demolish and reverse the top and reversal scenario a close above 24.60 is needed. First singal of this to play out would be a close of the gap created with the opening this morning
The SPDR S&P Regional Banking ETF (KRE) was hard hist yesterday following the news in SVB Financial. SVB was the largest holding in the ETF.
The Regional Banking ETF has broken below key support at 56 thus breaking bearish out of a medium-term Descending triangle like pattern – see weekly chart. The downside potential, given that KRE closes the week below 56, is between 42 and 33 i.e., the Consolidation area from 2020. Illustrated by the vertical arrows.
RSI is currently below 40 supporting the negative outlook for KRE.
To reverse the bearish picture a close above 62.55 is needed.
The SPDR S&P Banking ETF (KBE) closed bang on the key support at 42.60. Otherwise the technical picture is identical to the Regional Banking ETF KRE.
RSI is below 40 i.e., in negative sentiment supporting the bearish outlook where KBE is likely to trade lower. Strong support at around 35.
To reverse the bearish picture a close above 50.82 is needed.
A new fragmented world order can render some of today's infrastructure obselete, but it also calls for massive new investments across the globe, which requires a new set of strategic and tactical investment strategies.
Steen Jakobsen,
Chief Investment Officer
As globalisation turns to fragmentation, China seems set on playing a role in the global economy, while simultaneously working towards proofing its own economic situation from external shocks and crises.
Redmond Wong,
Market Strategist
The recent bank runs and ensuing challenges are reminicent of something we've seen before. Will it end like the S&L crises of 1986 and 1995?
Chris Dembik,
Head of Macroeconomic Research
Equity markets need to recalibrate to another - fragmented - global world. What's your view on equities in this market - are they going up or down?
Peter Garnry,
Head of Equity Strategy
With every development comes new opportunites, some of which could be in India. Have you considered the country as a part of your diversification strategy?
Charu Chanana,
Market Strategist
A collar is an option strategy that allows some protection while maintaining some upside potential. What investment would you like to use a collar strategy for?
Hans Oudshoorn,
Trainer Academy
There are arguments to be made for many commodities to have upside. Which are you paying the most attention to this quarter?
Ole S. Hansen,
Head of Commodity Strategy
In a very challenging macro environment, which currencies do you think will come out on top?
John J. Hardy,
Head of FX Strategy
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)