Medium term
Trade view / 04 July 2016 at 6:08 GMT

Clear signs of a spinning top for Swedbank


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 chart

SWED_A:xome daily development chart
SWED_A:xome daily development chart
Source: Saxo. Create your own charts with SaxoTrader; click here to learn more. 

— Edited by Robert Ryan

Non-independent investment research disclaimer applies. Read more
07 July
Johan Berntorp Johan Berntorp
Yesterday this stock hit the first target and bounced off the SEK 163 pivot. We shouldn't be surprised if the stock started to trade sideways for a few days.
20 July
Johan Berntorp Johan Berntorp
Right back at the SEK 176/177 pivot. Earnings tomorrow...


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