Banks have been in a better position then they currently are, which is more or less the main reason that the OMXS30.I has managed to print new lows due to the heavy banking weighting in this index. Shares in Swedbank (SWED_A:xome) are no exception from the general weakness in this sector.
The question now is whether the trend is set to continue lower immediately, or if we have more business to the upside before a continuation of the bear market trend. From a time cycle perspective, we can argue that the correction off the February 11 lows ended on June 7, and that a new trend lower began from there. The first swing lower of the new cycle appears to have ended on June 16, taking some nine days; on Saturday July 2, the bounce aligned 360 degrees with that low.
Looking at price, we have seen an interesting candle develop on Friday, a long range candle with a small body in that position is possibly a bearish signal. However in the current situation, confirmation is needed.
Fitting nicely with the low of the past Friday's spinning top candle we have a Gann pivot located at SEK 176. A daily close below this level would be the signal to engage on the short side.
Support below SEK 176 is found at SEK 163, SEK 154 and SEK 151.
Resistance is found at SEK 180, and a close above this level would negate the short to medium term bearish scenario.
Management and risk description
The plan is to short SWED_A:xome for a bearish move lower by selling a daily close below SEK 176 for a move lower into support at SEK 163, SEK and 154 and SEK 151.
The stop could be placed upon a close above SEK 180.
The risk to this situation is a larger quantitative easing rally on the back of past week's events.
Entry: Sell daily close below SEK 176
Stop: Close above SEK 180
Target: SEK 163, SEK 154 and SEK 151
Time horizon: One to two months
SWED_A:xome daily chart
SWED_A:xome daily development chart
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