HSBC technical analysis post earnings

Tuesday, 19th February 2019 12:58 - by Rajan Dhall

HSBC took a hit today as the Co. posted a 1.0% drop in ADJ net profits in Q4 to print a reading of USD 3.39bn, they cited the slowdown in China as the main reason for the miss but reported revenue rose 5% from last year and the market obviously priced in more. 

Mark E Tucker stated, "Despite a challenging external environment in the fourth quarter, all of our global businesses delivered increased profits."

Looking at the technicals on the weekly chart, price looks to be retracing after a decent upward trend between July 2016 to the beginning of 2018. Since the start of this year, it is clear to see that the slowing interest rate environment and the global slowdown have affected the whole sector. Price is currently heading lower into the main value area of the chart. This is where most contracts have been exchanged at price, in this case, it's around 635.5p. On the downside now the support levels are key at 589.6p there is a low volume node that could act as support and if that breaks 647.5p was used as support in early 2015. It is important to remember this week we have the FOMC meeting minutes and we could get more clarity on the rate situation since they announced they will pause the hiking cycle. 

On the daily chart, price is looking pretty bearish but there are some support levels coming up at 629.7p and 596.2p. If we have a conclusive break of the 629.7 level the lower 596.2p could be a downside target as the trendline break would provide further confirmation of the move. Of course, there are some broader market themes to keep an eye on, the US-China trade deal being the main one. If we see a positive conclusion to those talks there may be some relief. Longer term the balance sheet reduction story could come into play and the lowering prospect of an ECB rate hike. All in all its clear to see the share price is pretty bearish for now. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.