Will Crédit Agricole SA Stock Overcome June’s High?

The banking sector in Europe seems to be slowly recovering from the sharp decline it experienced in the period between mid-February and mid-March of this year. In general, the financial industry has been one of the hardest hit sectors due to the coronavirus pandemic and from the beginning of this year, it stands as the second worst performing sector. Financials currently sit only behind the Energy market, which is still trying to recover. However, the relatively cheap financial company stocks might attract some investors, who wish to try and take advantage of the lower prices.

Looking at the Crédit Agricole SA stock (EPA: ACA), we can see that since around mid-March, it has been slowly grinding higher. In June, ACA reached the 9.52 barrier, but then corrected lower. That barrier is now acting as a good area of resistance. At the same time, the share price continues to balance above a short-term upside support line taken from the low of May 14^th. As long as that upside line stays intact, there is a chance that the upside could continue. That said, in order to get a bit more excited about larger extensions higher, a break above June’s high, at 9.52, would be needed.

If ACA eventually pops above the 9.52 barrier, that will confirm a forthcoming higher high and more new investors may join in. The stock might then travel to the high of March 5^th, at 10.23, where it may receive a temporary hold-up. That said, if the buying doesn’t end there, a break of that territory could clear the way to the 11.02 level, marked near the highs of February 28^th and March 2^nd.

Both of our oscillators on the daily chart are currently flat, but the fact that the RSI continues to float above 50 and that the MACD is above zero and fractionally above its trigger line, suggests there might still be some more upside left in the near term.

Alternatively, if the aforementioned upside line breaks and the share price falls below the low of last week, at 8.40 that may spook new buyers from entering any time soon. Such a move may increase the stock’s chances of moving lower, where the next potential support area could be at 7.78, which is the lowest point of June. If the slide continues, a break of the 7.78 obstacle may open the door for a test of the 7.37 level, marked near the highs of May 5^th, 11^th and 19^th.    

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