Bullish Technicals For European Banks

Bullish Technicals For European Banks

A negative surprise in European economic data, the Italian political fallout, global trade war rhetoric as well as softer equity markets for the year to date 2018 has led to a global economic sentiment being somewhat subdued relative to prior years. This has seen the European economic recovery under threat as the ECB attempts to scale back on it’s quantitative easing program and convince market participants that the region is on a firmer footing. At the center of the economy are Europe’s banks, which has significantly under-performed the region’s benchmarks as well as the broader global equity markets. Compared to it’s US counterparts, shares have been a major laggard since the global financial crisis, as can be seen on the graphic provided by Bloomberg below:

An image

After seeing substantial price declines year-to-date, there may be an opportunity for traders to take buy/long positions as these shares look to make bullish reversals. Here, two stocks stand out: France’s Societe Generale and Germany’s Deutsche Bank.
Societe Generale:  
Key Technical Drivers:
– Extended well-below it’s 200dma

– RSI and MACD bullish divergence

Buy SocGen €36.95/36.98
Stop-loss: €34.90
Take Profit Target: €40.00

Deutsche Bank: 
Key Technical Drivers
– Extended well below it’s 200dma
– RSI bullish divergence
– Reversal off support
Buy Deutsche Bank €9.82/9.86
Stop-loss: €9.15
Take Profit Target: €11.00

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