The RBA's shift to a neutral bias on interest rates put bank stocks in the front line on what was a day of heavy selling even before that. I thought both traders and investors might be interested in some quick thoughts on the Australian bank charts.
CBA is due to report next week and is cum dividend while the other majors won't be reporting until early May. Not surprising then that CBA is still just above its 200 day moving average while the others have now fallen below.
As you can see on the chart below, CBA has been above the 200 day moving average since May 2012 . If nothing else, a move below will attract a bit of attention. Perhaps significantly, the moving average has for some time also been hugging the blue trend line, creating a support cluster which may add to the impact of a break below this level.
Share market corrections have generally been pretty shallow since the 2nd half of 2012 and the banks have been no exception. So it's difficult to make the call that this one will be any different. Even so, it pays to be flexible as a trader and to at least consider the possibility of taking the chart at its face value.
A clear break below this support could, for example, see a correction of the whole rally since price moved clearly above the 200 day moving average in mid 2012.
A 38.2% retracement of this move would find about $68 while a 50% retracement would be $64.27. Depending on how quickly price got back there, these retracements levels could coincide with the potential black trend line, adding to their significance.
It's also worth bearing in mind that the technical picture on CBA could be impacted by the stock going ex dividend.
I've used NAB's weekly chart to represent the other 3 "ex dividend banks" just because it looks clearest to me.
It broke below it's 200 day moving average today but possibly not by quite enough to call a definite trend change. Any further downside though, would probably be enough for most moving average followers to make this call.
The rally since mid 2012 looks to have been a 5 swing advance creating the potential that we are now correcting that whole move. If this proves correct, a 38.2% Fibonacci retracement would see a pull back to $31.30 while 50% would see $29.50