When the global equity market got a strong shake up in the end of February and after that took a major dive, the banking sector was one those that suffered a huge decline. But the Banco de Sabadell stock (BME: SAB) had already been on a steep decline prior to that. It was moving sharply lower from the start of this year. In the first days of January, SAB was trading near the 1-euro mark. But that wasn’t for long, as the bank started showing more worrying signs of a possible sharp decline in earnings. Indeed, at the end of January, SAB reported a net loss of around 15 million euros, which spooked new investors from entering. The share price fell all the way to the 0.25 level, which is the lowest the stock has ever been at. That said, since then, it changed its course and started moving north.
From the technical side, we see that SAB is now balancing above a short-term tentative upside support line taken from the low of May 20th. The share price is slowly approaching its key resistance barrier, at 0.337, marked by the highs of May 11th and 27th. In order to get comfortable with further advances, we will wait for a break of that area first, hence why we will remain somewhat bullish.
Eventually, if the above-discussed break of the 0.337 barrier happens, this may attract more buyers, who could help the stock to continue with its journey north. We will then aim for the 0.397 hurdle, marked by the high of April 30th, which might halt the acceleration temporarily. However, if there is still demand in SAB even at that price, this could help it rise a bit higher, where the next potential resistance may be seen near the 0.425 level, marked by the low of April 3rd. Slightly above it runs the 200-day EMA, which might provide an additional hold-up.
The RSI and the MACD are supporting the idea of seeing a bit of upside, at least in the near term. The RSI is above 50 and continues to point higher. The MACD is above zero and its trigger line, and is also pointing higher.
Alternatively, if the share price breaks below the aforementioned upside line and slides below the 0.269 hurdle, which is the low of May 29th, this could open the door to further declines. The stock might then drift to its all-time low, at 0.250, a break of which would confirm a forthcoming lower low and place SAB in an uncharted territory.
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