Italian stocks have been getting hit hard lately due to fears that Italian President Mario Draghi may step down as President of Italy. Yesterday, Mario Draghi confirmed that he will be stepping down.
The Italian election to confirm the next President of Italy is scheduled to take place of September 18th. This leaves around 2-months for Italy to find a suitable replacement for Draghi.
Trading Italian stocks could be volatile in the lead up to the next Italian election. I think we could also see more downside over the coming days and weeks if no strong candidates emerge.
The reality was the while Mario Draghi was well respected in the job and had tremendous credibility from his time with the European Central Bank. If any hard left or right candidates emerge it could hit Italian stocks hard.
Intesa Sanpaolo banking stock could be worth watching to play the volatility. The banking stock has been hit hard recently and some interesting trading opportunities are emerging.
A bearish pattern is currently projecting further heavy losses for this banking stock. The size of the pattern implies a potential 30% downside over the coming weeks and months for this stock.
However, the flip side of this trade is if we see a positive reaction then we could see a move back towards the 1.00 region. For the record the stock is currently trading close to 1.60.
Intesa Sanpaolo Short-Term Technical Analysis
The four-hour time frame shows that the Intesa Sanpaolo banking stock is under its 200-period MA on the mentioned time frame. Additionally, a large head and shoulders pattern has been forming.
According to the size of the typically bearish price pattern, a directional move of around 100 points towards the 1.50 area is possible. A bearish bias is in play while the price trades under 1.90.
Intesa Sanpaolo Medium-Term Technical Analysis
The daily time frame shows that a large head and shoulders pattern has clearly been formed. The pattern will reach its full downside projection only once the price reaches 1.00.
If the price moves above the 1.80 area, I think a rebound towards the 2.00 area seems likely. The fundamentals will continue to dictate the technical for this particular stock for some time.