European bank and insurance equities have closed above key resistance, suggesting the long-expected move higher has finally started, according to David Sneddon and his team at Credit Suisse in London.
Euro STOXX Banks completed a bullish triangle continuation pattern in early October and has now finally moved above the pivotal high of 2019 at 104.48 (see Chart). Assuming there is a weekly close above here, which is Sneddon’s base case, this should finally confirm the long expected and large head-and-shoulders bottom. He looks for this to act as the platform for a significant move higher with initial resistance seen at the 61.8% retracement of the 2018 to 2020 bear trend at 107.22 with scope to reach the 2018 high at 143.73 over the longer term. Similarly, Euro STOXX Insurance has broken its downtrend from 2020 and moved to a new high for the year and Sneddon looks for further gains to the 2020 high at 318.