Banks & Financial Services Index (TBFSI) Sector Call | Technical Analysis

Financials | Saudi Arabia

Thursday , 12 November 2015

The banking sector is cashing in

Weekly

Tadawul's Banks & Financial Services Index (TBFSI) index started a downtrend in August2014, dropping 38% from a high of 24,747 to a low of 15,276 recorded this month. As shownon the weekly chart below, the RSI is diverging positively with the price. In addition, the RSIjust crossed above its 30 line, indicating a 'Buy' signal.

Daily

We think there are several reasons why this could be a bottom for TBFSI.

(1) The posi ve divergence between the lows of the downtrend and the lows of the RSIindicator. Indeed, the latest two tops on both the trend and the indicator supports this view.Meanwhile, the divergence indicates the near end of the decline and the start of a pullback.

(2) The volume accompanying the last down-leg that started to rise. This indicates apossible strong buying power.

Conclusion

The Saudi banks and financial services sector is rebounding and is expected to rise,targeting 16,400 as the first target.

Mona Hassan, CFTeSenior Technical Analyst

Mubasher InternationalMona.Hassan@MubasherFS.com

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