Technical Analysis: Banks treading water

12th Jun 2009 11:02

Banks have again been in the spotlight this week with speculation growing about the government's withdrawal from ownership of large stakes of RBS and Lloyds as well as Northern Rock.Further adding to the mix has been Barclay's sale of its fund management arm to BlackRock for £8.1bn, and the upgrading of HSBC to "outperform" from "neutral" by Credit Suisse. This sale by Barclays should add an estimated 150 basis points to its Core Tier 1 capital ratio as at 31st December 2008. This news has buoyed the sector over the past 10 days, and has seen the sector re-test its 200 day moving average, having failed on a number of occasions since the beginning of May to break above it. The sideways consolidation between the May highs around 4,320 and 4,246, and the May lows around 3,880, that I referred to in my last piece has continued to corral the market. There is some evidence that we could be seeing an attempt to break out on the upside as the market starts to break above the 200 day average currently around 4,015. Barclays: Since the partial sale of the Arab stake, Barclays share price has held up rather well, a low of 255p being the extent of the sell-off. It is struggling to maintain any semblance of gains above the 300p level for now. While below its 61.8% retracement level around 312p, expect any upside momentum to be limited. A break above 320p could well signify further gains towards the October highs of 376.50p.HSBC: the 200 day moving average continues to cap this stock with the market trading in a fairly tight rectangular range with a slight downward bias. A break above the 200 day average and the channel resistance at 577.25p could well see a move to the new price target of 670p set by this weeks broker upgrade. Lloyds: the successful placing of 87% of its open offer at 60p, has underpinned the share price at around this level. The reporting this week by the Telegraph of possible further repayments by way of an exchangeable bond being issued by UKFI has also helped sentiment. A rally back above 75p would certainly help stabilise matters, but with broker sell recommendations outweighing buys by 3 to 1, the short term upside potential looks limited for now.RBS: following the decline from the highs around 51p the share price found a base around the 35p level. It has started to find a bit of support on the back of the speculation about the UKFI exchangeable bond. Trend line support from the 10p lows remains intact, currently around 33p.Standard Chartered: has struggled a little over the past few days and appears to be losing momentum on the upside. There is a danger of a drift back towards support at 1100p, as the upward momentum since March begins to wane. A rally back above the trend line from the recent 1337p highs is required to move things forward here. This level currently dissects the price axis around 1,264p. The banking sector does appear to be finding support at higher levels, but given the fact that it has more or less been trading sideways for the past few weeks, it will take a significant piece of news to move it out of its current trading range.For periodic TA updates follow me on TwitterAlso read my Investors Guide to Technical Analysis and Level 2