Geoff Wilkinson, Associate at Linear Investments, offers the charting outlook for Euro-land banks, the Pan-European banking index, Euro Stoxx 50, and GBP/USD, joined by Zak Mir, Technical Analyst at Zak’s Traders Cafe.
Key Quotes
“Banking sector feeling the heat, Insurance sector in the same boat as well”
“Euro-land banks - Well defined falling channel. Key resistance at 90 levels. Investors appear keen on selling the rallies. Gap support at 87.35, falling below this will pave way for 84 levels. Bulls need to see a close above 90.00.”
“The initial rally from the bottom was due to short-covering. Now we need to see a switch into buying. Above 90.00, people could come in with fresh longs.”
“Pan-European banking index – Key resistance at 132.40, long-term trend line resistance at 131.85. Gap support at 128.75, below this we are looking at 126.00. We are clearly not making any upside progress and right now remain in a Mexican standoff.”
“Euro Stoxx 50 – The technical chart remains identical to banking chart. We do need to see a close above 2965. But a big bull run would require a close above 3000. After multiple attempts to take out the same level we are seeing selling today. Support at 2900 levels..real key support is at 2870. Below 2870 is bullish invalidation.”
“The recent rally was heavily fuelled by banks. Looking to buy dips but lack of upside progress is a issue now.”
“GBP/USD – In a long-term down channel. The channel support is currently around 1.3075. If we close below 1.29 then things would start to look very serious and that would open doors for a drop towards 1.25. Needs to stay within the channel and above 1.29.”
On Cable, “UK isn’t in a really bad shape but Brexit vote was a shock. Real surprise is sterling’s weakness against the Euro. Keep an eye on GBP/EUR.. easier to buy GBP/EUR than GBP/USD. But if Cable breaks below 1.29 it would drag GBP against other currencies as well.”