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
- 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
- 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
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
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)
- 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
- 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)
