Thursday, August 11, 2016

EUFN European Banks ETF Weekly Chart Downward-Sloping Channel Positive Divergence

The European banks have been beaten over the last couple years. The central bankers and politicians are preparing bailouts so the sector has recovered over the last six weeks. Price bounces after it tests the bottom rail of the blue channel, violates the lower standard deviation band (pink) and forms positive divergence across all indicators (green lines). Voila. Price jumps off the bottom with the middle band a target which is achieved at 16.80-16.85.

The chart also serves as a proxy for the troubled Deutsche Bank, DB, which may bring down the entire global financial system if it falters. The pink box shows a strong trend in place which was a downtrend during late 2015 and early this year. That strong downtrend has ended.

Price will pivot from this center band area which is also the 20-week MA at 16.85. If price breaks out higher it will seek that cluster at 18.00-18.80. If price breaks down from here it will seek the lower support levels at 15.00-16.00.

The green possie d lines are across all indicators so there is no reason for price to come back down again to test the lows in this weekly time frame. This is encouraging for Europe since the downside in banks will likely receive a reprieve in this weekly time frame. Price may venture lower but the path ahead may be best represented by the sideways brown channel. That may be the range forward for the remainder of the year. The ETF may develop into a nice trading stock if it begins oscillating through the brown channel. The jury is out as to the longer term direction. Price wants to stumble sideways for a few weeks or months. Any move out of the brown channel will be very telling. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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