The Spanish banking sector is still struggling with its recovery, after the sharp decline from mid-February. The ECB is trying to do all it can, to help that sector not to collapse. The Spanish bank borrowing in May reached a new high since 2014, where they requested 176 billion euros from the ECB. Under the TLTRO scheme, those banks will earn a yearly 0.5% interest if they pass on the funds to businesses and households. Hopefully this could help the domestic market to survive the downturn and at the same time help some banks gain investor interest again.
The Bankia SA (BME: BKIA) has been one of those banks, which were hit the most since its IPO in July 2011. If we look at the overall move of BKIA since the launch on the stock market, the share price managed to hit its all-time high, at 156.000, in August of the same year, however, from there onwards, it was downhill for (currently) the fifth largest bank in Spain. In May this year, BKIA dropped to its all-time low, at 0.707. Last week, the stock hit the area around the 1-euro mark, from which it corrected lower. On Monday, the price started rising again and is now close to the high of last week, at 1.026. BKIA is now trading above a short-term tentative upside support line taken from the low of May 29th. Although we are seeing a bit of positivity in the near-term outlook, we would prefer to wait for the stock to burst through last week’s high first, before examining a further acceleration.
If, eventually, we do see a strong move above the aforementioned 1.026 barrier, this would not only place the price above its 200 EMA on the 4-hour chart, but also confirm a forthcoming higher high. More buyers could see it as a good opportunity to step in and drive the stock higher. We will then target the 1.068 obstacle, a break of which might set the stage for a move to the 1.138 level, marked by the high of March 18th.
Our oscillators, the RSI and the MACD, continue to point higher, suggesting that the price is still holding onto its upside momentum. In addition to that, the RSI is still above 50 and the MACD has just poked its nose back above the trigger line, while continuing to balance above zero.
Alternatively, if the previously-discussed upside line breaks and the share price falls below Monday’s low, at 0.878, that may confirm a forthcoming lower and could open the door to some lower areas. BKIA might then slide to the 0.824 obstacle, a break of which may set the stage for a re-visit of the 0.752 level, marked by the low of May 29th.
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