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STOXX 600 Banks Index: Freaking Weak

Monthly time frame:

  • This is an ugly chart
  • The Stoxx 600 Banks Index has not even been able to reclaim the 0.382 retracement of crash from the 2007 Top
  • Price is now in no man's land with the risk of a retest of the 2011 low at 114 if a bottom is not established soon

Stoxx 600 Monthly Chart
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  • From the 2015 high we can count a 3-wave down leg
  • If the resistance located at R1 = 157.34 is reclaimed there is a "pocket of air" until the following resistance R2 = 174

Stoxx 600 Monthly Zoom Chart
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  • Monthly oscillators are oversold (RSI and Stochastic) but the MACD has a bearish signal cross in force and in addition is has lost the zero line. Hence a potential rebound will be most likely countertrend as long as the bearish signal cross is not cancelled

Stoxx 600 Monthly Momentum Chart
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Weekly time frame:

  • The week ended with a Harami. This pattern in prolonged down trend can establish a turning point.
  • Even if from the July 2015 top we have a 3-wave down leg, price is below all major moving averages; hence a rebound should be considered a countertrend move. However the Stoxx 600 Banks Index could achieve a 10% rebound towards the R1 = 157
  • A trend reversal would require to breach the trend line from the 2015 top and reclaim R2 = 174

Stoxx 600 Weekly Chart
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Daily time frame:

  • The pattern from the July 2015 top is corrective. So far we have a 3-wave down leg, and the third wave down can be considered a thrust following a Triangle completed on December 12. The issue is if the third wave is done. If it were done a countertrend wave (2) or (X) should achieve T1 = 155 -156 (0.382 retracement and horizontal resistance) or even T2 = 162 - 163 (50 dma and 0.5 retracement)

Stoxx 600 Daily Chart
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  • If a short-term bottom is in place last Monday's gap at 137.80 must not be closed, in which case odds would favor at least another up leg with target at T1

Stoxx 600 Daily Zoom Chart
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  • Daily oscillators are aligned with the scenario of a larger rebound although we shall see if the RSI can breach overhead resistance (Trend line from April 2015)

Stoxx 600 Daily Momentum Chart
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