News

Chart Analysis: Royal selloff and Canada bank earnings

Chart Analysis: Royal selloff and Canada bank earnings

Despite reporting better than expected earnings and raising guidance, Royal Bank is having a really rough day in the market. For the last six months, Royal has been steadily climbing but the emergence of a head and shoulders top in the RSI followed by a negative divergence (RSI did not confirm new highs in the stock price) suggest upward momentum weakening. Today has been an ugly day technically that could potentially signal a bearish trend reversal. The shares touched a new 52-week high then were slammed down hard and appear to be heading for a Key Reversal Day or a Bearish Engulfing Candle. Either way, this suggests that a big change in sentiment has taken place with traders looking to the report as an opportunity to take profits rather than add to positions. Initial support in a correction may appear near $80.00, a round number, or $78.80 a 23% Fibonacci retracement of the previous uptrend. Today’s selloff has bearish implications for the rest of the Canadian banks, many of which have also rallied ahead of their earnings reports which come out over the week of August 25th. Bank of Montreal and Bank of Nova Scotia report Tuesday the 26th followed by CIBC and TD on Thursday August 28th.


Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.