At the end of July, BNP Paribas SA (EPA: BNP) delivered its Q2 earnings results, which were a pleasant surprise, as some analysts expected the numbers of the French bank to be on the lower side, due to the pandemic. As stated in bank’s press release on July 31st: “Our diversified banking model has proven its effectiveness in supporting clients and the economy in front of an unprecedented health crisis. BNP Paribas was able to quickly mobilise its teams, resources and expertise to meet the needs of its clients across Europe and beyond”. During the first half of 2020, BNP Paribas Group raised around 250 billion euros for their client financing across the world. Also, according to the official press release, BNP Paribas had participated in around 70% of all syndicated loans and in 53% of all bond issues in the EMEA. On one hand, some might say that the French bank has too much exposure, which could be devastating for it if the global financial sector suddenly experiences a negative shock. On the other hand, as history shows, some financial institutions are considered as “too big to fail” and tend to be bailed out, if or when that is required. Overall, we can say that BNP Paribas is performing quite well in this low-interest-rate environment. Also, the French financial giant is one of the leaders in fighting for the environment, as it promotes the reduction of coal usage by its clients.
Looking at the BNP Paribas stock from the technical side, we can see that, after the end-of-February/beginning-of-March decline, the share price had recovered somewhat. That said, it is still far from the levels where it was trading in January and the first half of February. From around the end of May, the stock started slowly getting squeezed, while trading between two lines: a short-term downside resistance one drawn from the high of June 8th, and a medium-term upside one taken from the low of May 29th. For now, we will remain neutral and wait for a violation of one of those lines, before examining the next directional move.
A break of the aforementioned downside line and a price-rise above the 38.51 barrier, marked by the high of August 31st, could open the way towards larger advances, as more buyers may see a small window of opportunity for them. If so, BNP might travel towards the highest point of June, at 40.66, a break of which could open the way to the 43.06 level. That level marks the high of March 4th.
Looking at the RSI and the MACD on our daily chart, both indicators seem to be flat. The RSI continues to oscillate around 50 and the MACD keeps moving around zero. Both indicators seem to support the idea of staying neutral, at least for now.
Alternatively, if the stock breaks the aforementioned upside support line and falls below the lowest point of July, at 33.80, that will confirm a forthcoming lower low, potentially clearing the way to further declines. BNP might then drift to the 32.17 obstacle, a break of which may set the stage for a test of the 31.09 level, marked near the highs of March 26th and the highest point of April.
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